Gold (XAU/USD) firms on Thursday as a mildly softer US Dollar (USD) and a modest pullback in US Treasury yields help the precious metal recover some ground after three consecutive days of losses.
Meanwhile, hawkish Fed expectations are providing additional support to the USD.
Technical analysis: Sellers retain control below the Bollinger middle bandOn the daily chart, XAU/USD keeps a bearish near-term bias, with price sitting below the 20-day Simple Bollinger middle band at $4,135.
On the topside, initial resistance emerges at the Bollinger middle band around $4,135, followed by the horizontal barrier at $4,200 and then the Bollinger upper band near $4,326.
On the downside, immediate support is seen at the psychological $4,000 handle, ahead of the lower Bollinger band clustered around $3,944, where buyers could attempt to slow the current corrective phase.
Gold (XAU/USD) firms on Thursday as a mildly softer US Dollar (USD) and a modest pullback in US Treasury yields help the precious metal recover some ground after three consecutive days of losses.
At the time of writing, XAU/USD is trading around $4,123, up 1.16% on the day.
However, Gold's upside remains limited as renewed hostilities in the Middle East revive concerns over energy-driven inflation, reinforcing market expectations that the Federal Reserve (Fed) may need to raise interest rates.
The United States (US) and Iran exchanged another round of attacks overnight. US President Donald Trump said on Truth Social, "This is in retribution for yesterday's bombing of ships by Iran. If it happens again, it will get much worse!"
On Wednesday, Iran reiterated its threat to close the Strait of Hormuz if fresh attacks occur, raising concerns that global Oil flows could once again be disrupted after improving following last month's interim peace agreement.
The latest escalation has weakened hopes for a permanent peace agreement, hurting risk sentiment and keeping the US Dollar (USD) well supported despite some intraday weakness. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 100.90 after touching an intraday low of 100.79.
Meanwhile, hawkish Fed expectations are providing additional support to the USD. According to the CME FedWatch Tool, markets are pricing in a 63% chance of a rate hike at the September meeting. Higher borrowing costs tend to weigh on Gold because the metal does not offer yield.
New York Fed President John Williams said on Thursday, "Inflation is still far too high," adding that the Fed is "actively debating scenarios around inflation" and remains committed to bringing inflation back to its 2% target.
Analysts at OCBC Bank noted, "While geopolitics would normally offer some support for gold, the latest move has worked more through the oil, inflation and rates channel." They added, "Near term, unless oil stabilises or Fed/rates concerns ease, rallies in gold and silver may still struggle to sustain."
Technical analysis: Sellers retain control below the Bollinger middle band
On the daily chart, XAU/USD keeps a bearish near-term bias, with price sitting below the 20-day Simple Bollinger middle band at $4,135. The Relative Strength Index (RSI) at 43.12 remains below the neutral 50 mark, hinting at subdued upside momentum, while the Average Directional Index (ADX) around 37 suggests a reasonably strong prevailing trend despite the latest consolidation.
On the topside, initial resistance emerges at the Bollinger middle band around $4,135, followed by the horizontal barrier at $4,200 and then the Bollinger upper band near $4,326.
On the downside, immediate support is seen at the psychological $4,000 handle, ahead of the lower Bollinger band clustered around $3,944, where buyers could attempt to slow the current corrective phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
