Gold Holds Near Lows Ahead of FOMC Minutes as Yields Rise

Key Moments

Gold Softens After Brief Bounce

Gold (XAU/USD) is trading near the bottom of its daily range, below the $4,450 mark, after giving up modest intraday gains heading into the European session on Wednesday. The metal had attempted a recovery from a new weekly low as some selling pressure emerged in the US Dollar (USD), but buying interest in the non-yielding asset remains subdued.

Market participants appear reluctant to take strong directional positions in gold and are instead waiting for clearer signals on the future path of US monetary policy from the Federal Reserve (Fed). The upcoming release of the Federal Open Market Committee (FOMC) Minutes is drawing particular attention as traders seek additional guidance before committing to new positions in bullion.

Middle East Tensions Fuel Energy and Inflation Concerns

The focus on the FOMC Minutes is intensifying against a backdrop of renewed inflation worries linked to higher energy prices. These concerns are rooted in ongoing geopolitical tensions in the Middle East, which have pushed crude oil prices to a nearly three-week high amid a US-Iran standoff over the Strait of Hormuz.

President Donald Trump has stated that the United States is not engaged in talks with Iran and that the naval blockade of Iranian ports remains fully in effect. In addition, Trump posted a map on Truth Social showing the strategic Strait of Hormuz as new US territory.

At the same time, Iranian Parliament Speaker Mohammad Bagher Ghalibaf said that the vital shipping channel will stay closed until the United States complies with conditions laid out in a June memorandum of understanding. This sustained geopolitical tension is helping to underpin a risk premium in crude oil prices, intensifying inflation concerns and pushing the 30-year US Treasury yield to its highest level since June 2007.

According to CME Group’s FedWatch Tool, traders continue to assign roughly a 68% probability to an additional Fed rate hike by the end of the year, reflecting expectations that persistent inflation risks could keep policy tight for longer.

ING: Higher Energy Prices Support the Dollar and Rate-Hike Bets

Analysts at ING note that the US Dollar index (DXY) has “rebounded from the range lows at 99.40,” and emphasize that “the Dollar is not quite ready to make a sustained break lower just yet.” They identify “higher energy prices and rising 30-year Treasury yields” as the main factors underpinning the currency in the near term, and caution that “both of these, should they extend, could put a September hike from the Fed back on the agenda.”

On the energy front, ING comments that “news that Washington seemingly has little interest in extending the 60-day ceasefire with Iran has seen oil and gas prices creep higher again.” While “in which direction the next big leg for energy prices emerges is anyone’s guess,” the bank underlines that “higher energy is a Dollar positive – both through US energy independence and the Fed’s reaction function.”

Beyond the energy and rates backdrop, ongoing geopolitical tensions are also encouraging some investors to retain exposure to the safe-haven US Dollar. This combination may limit the downside in the Greenback and warrants caution before positioning for a sustained advance in gold prices.

Technical Picture: Bullish Momentum Under Pressure

From a technical standpoint, XAU/USD has been unable to secure a sustained break above the 50% retracement of the April-June decline and continues to trade well below the 200-day Simple Moving Average (SMA). This configuration keeps the short-term bias tilted to the downside, even as prices consolidate not far from recent highs.

Momentum indicators present a mixed but fragile bullish backdrop. The Moving Average Convergence Divergence (MACD) indicator is still above the zero line but has rolled back toward the signal line, while the Relative Strength Index (RSI) stands at 59.24, remaining in positive territory. Together, these signals point to ongoing, yet vulnerable, bullish momentum as long as gold fails to break key resistance levels.

Key Technical Levels for XAU/USD

On the upside, the 50% retracement at $4,406 is the first significant barrier. Above that, the 200-day SMA near $4,509 and the 61.8% Fibonacci retracement at $4,519.36 collectively define a broader resistance zone that could cap rallies.

On the downside, initial support lies at the 38.2% Fibonacci retracement at $4,292, which protects against a deeper pullback toward the 23.6% retracement at $4,152. Below that, a more important structural base is located around $3,925.