Key Moments
- XAU/USD rebounds from the intraday low as the US Dollar softens but continues to trade below the $4,050 mark.
- Escalating US-Iran tensions and new US tariffs support the Greenback and restrain further upside in the precious metal.
Gold Edges Higher on Dollar Pullback, Stays Capped Below $4,050
Gold (XAU/USD) is recovering from earlier intraday losses as the US Dollar (USD) retreats modestly, yet the metal remains below the $4,050 threshold ahead of the European session on Friday. The move higher lacks strong follow-through, with broader macro and geopolitical forces continuing to limit upside momentum.
Crude oil prices remain elevated amid ongoing tensions between the United States and Iran. Higher energy prices are stoking concerns about renewed inflation pressures and are reinforcing expectations that US interest rates may stay elevated for longer. This backdrop is providing underlying support for the USD and constraining the advance in the non-yielding metal.
US-Iran Tensions Intensify, Boosting Oil and Inflation Concerns
The US military reported that it completed another round of strikes against Iran on Thursday, extending operations to a 13th consecutive night. According to a statement from US Central Command (CENTCOM), US forces targeted “Iranian military command centers, drone storage facilities, communication networks, coastal surveillance sites, and maritime capabilities.” The operation was described as an effort to further reduce the threat Iran poses to civilian shipping and commercial traffic through the Strait of Hormuz.
These latest strikes are occurring against the backdrop of a broader regional confrontation. Iran and its allies have carried out retaliatory strikes on US-linked military assets in Kuwait, Bahrain and Jordan. In addition, Iran-aligned Houthi forces attacked two Saudi oil tankers in the Red Sea, describing the action as part of a naval blockade on Saudi Arabia and extending the conflict in the Middle East to a second critical maritime chokepoint. The heightened risk of supply disruption has pushed crude prices to their highest level since June 11.
Higher Oil and Strong Labor Data Reinforce Fed Hawkish Bias
Market participants remain concerned that sustained strength in crude prices could reignite inflationary pressures, prompting major central banks, including the Federal Reserve (Fed), to maintain or even strengthen their hawkish stance. This theme was reinforced by economic data released on Thursday showing that US Jobless Claims dropped to the lowest reading since September 1969, signaling ongoing resilience in the labor market.
The solid employment backdrop gives Fed officials scope to keep prioritizing inflation control. This dynamic supports expectations for at least one additional interest rate increase before the end of this year, a scenario that typically weighs on gold given its lack of yield.
New US Tariffs Lift Dollar, Pressure Risk Sentiment and Gold
At the same time, US President Donald Trump has unveiled broad new tariffs of between 10% and 12.5% on 60 of the country’s key trading partners, covering 99.4% of US imports. These measures raise the risk of a renewed global trade conflict, dampening appetite for risk-sensitive assets and further enhancing the appeal of the Dollar as a reserve currency.
This combination of firmer USD support and weaker risk sentiment underpins the case for an extension of the recent pullback in XAU/USD from the two-week high reached on Wednesday, as markets look ahead to the upcoming Federal Open Market Committee (FOMC) meeting next week.
Technical Picture: Downside Bias Persists Toward $4,000
From a technical standpoint, the rejection near the 200-period Exponential Moving Average (EMA) earlier this week, followed by a subsequent decline, indicates that the rebound from the $3,960-$3,959 region – the monthly low – has lost momentum.
Additional bearish signals come from the indicators: the Moving Average Convergence Divergence (MACD) is in negative territory with its line positioned well below zero, while the Relative Strength Index (RSI) is hovering near 41. Together, these point to ongoing downside pressure.
| Technical Level | Type | Comment |
|---|---|---|
| $4,158.08 | Resistance | 200-period EMA; a sustained break higher would begin to alleviate bearish pressure |
| $4,050 | Reference level | Price remains below this area heading into the European session |
| $4,000 | Support / psychological | Break lower could accelerate selling |
| $3,980-$3,975 | Support | Loss of this zone would reinforce a negative outlook |
| $3,960-$3,959 | Support / monthly low | Area of the recent bounce; failure here would open the door to deeper declines |
A clear move below the $4,000 psychological level, followed by a break of the $3,980-$3,975 area, would confirm the bearish scenario and pave the way for additional downside. In the near term, intraday support zones are more likely to be shaped by past price reactions rather than by classic indicator-based levels.
On the upside, initial resistance is defined by the 200-period EMA at $4,158.08. Only a sustained recovery above this medium-term threshold would begin to relieve prevailing downward pressure.
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