While Gold has staged a modest rebound from $3,941, its lowest level since November 2025, the metal is struggling to attract meaningful buying interest.
The situation in the Middle East remains fragile, keeping the risk of energy-driven inflation at the forefront.
Gold is therefore unlikely to stage a sustained recovery as expectations for a Fed interest rate hike later this year continue to support the US Dollar (USD) and US Treasury yields.
Attention now turns to next week's US Consumer Price Index (CPI) data, due on Tuesday, which could shape expectations for the Fed's interest rate path in the coming months.
On the upside, initial resistance emerges at the horizontal barrier near $4,200, ahead of the 50-day SMA around $4,352.
Gold (XAU/USD) trades on the back foot on Friday, struggling to build on the previous day's gains and heading for a weekly loss as renewed hostilities in the Middle East have revived fears of energy-driven inflation and Federal Reserve (Fed) interest rate hikes.
At the time of writing, XAU/USD is trading around $4,104, down 0.45% on the day.
The metal, however, lacks follow-through selling as traders reassess US-Iran tensions following reports that technical talks are continuing despite the military clashes, prompting a pullback in crude Oil prices. In a post on Truth Social, US President Donald Trump said Iran had asked to continue talks and that the United States had agreed, while emphasizing that Washington had informed Tehran that the ceasefire was "over."
Can Gold stage a sustained recovery?
While Gold has staged a modest rebound from $3,941, its lowest level since November 2025, the metal is struggling to attract meaningful buying interest.
Since the US-Iran war broke out in February, Gold has behaved less like a traditional safe-haven asset and more like a rate-sensitive instrument, with price action largely driven by the hawkish repricing of Fed interest rates.
As a result, Gold posted its worst quarterly performance in thirteen years, while traders also booked profits following an exceptional two-year rally that pushed prices to a record high near $5,600 in January.
The near-term outlook is still tilted to the downside. The situation in the Middle East remains fragile, keeping the risk of energy-driven inflation at the forefront.
Even if geopolitical tensions ease and lower crude Oil prices help reduce inflation concerns, the Fed is expected to maintain a restrictive monetary policy stance as policymakers continue to signal the central bank's commitment to returning inflation to its 2% target.
Gold is therefore unlikely to stage a sustained recovery as expectations for a Fed interest rate hike later this year continue to support the US Dollar (USD) and US Treasury yields.
According to the CME FedWatch Tool, markets are pricing in a 58% chance of a rate increase at the September meeting. Attention now turns to next week's US Consumer Price Index (CPI) data, due on Tuesday, which could shape expectations for the Fed's interest rate path in the coming months.
Technical analysis: XAU/USD struggles below key resistance levels
On the daily chart, XAU/USD remains within a downward channel and is holding below the 50-day, 200-day and 100-day Simple Moving Averages (SMAs), which collectively cap the upside and reinforce a bearish bias.
Momentum is subdued, with the Relative Strength Index (RSI) at 43 hovering below the neutral 50 line, while the Average Directional Index (ADX) at 37 points to a still-firm trend, suggesting that selling pressure remains dominant as Gold struggles to reclaim broken levels.
On the upside, initial resistance emerges at the horizontal barrier near $4,200, ahead of the 50-day SMA around $4,352. A stronger resistance zone lies around the 200-day SMA at $4,493, with the upper boundary of the descending channel near the 100-day SMA at $4,593 likely to cap any recovery attempts.
On the downside, the next notable support sits at the horizontal level around $3,950, and a clear break below this floor would open the door to a deeper slide within the prevailing bearish structure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
