Gold (XAU/USD) continues its sideways, consolidating price movement above the psychological $4,500 mark during Thursday’s Asian session and for now appears to have halted the overnight decline from the rejection of the 100-day plain moving average (SMA). However, the positive momentum remains confined amid a hawkish stance from central banks and a rising US dollar (USD). This, in turn, requires caution before taking a position on an extension of this week’s solid recovery from the technically essential 200-day SMA near the $4,100 level, the lowest level in four months.
Despite U.S. President Donald Trump’s rhetoric about a ceasefire, Iran has publicly rejected claims that negotiations are ongoing and said there is no chance of an agreement between the two adversaries. Moreover, Iran rejected the US’s 15-point ceasefire proposal and reportedly made far-reaching demands aimed at ending the deepening conflict in the Middle East. Additionally, the deployment of additional U.S. troops to the region increases the risk of further escalation of the conflict, which further strengthens the dollar’s global reserve currency status and limits gold’s advantage.
Meanwhile, Iran’s energy infrastructure remains under pressure. Moreover, the effective closure of the Strait of Hormuz is acting as a tailwind for oil prices, stoking inflation fears and strengthening hopes for a hawkish stance from major central banks, including the US Federal Reserve (Fed). In fact, investors have almost overestimated the possibility of the Fed cutting rates further and are quickly increasing their bet on a hike by the end of this year. This causes a novel escalate in US treasury bond yields, which further supports the dollar and maintains control over the unprofitable gold.
However, traders seem reluctant to place aggressive directional bets and may choose to wait for further developments in the ongoing conflict in the Middle East. Nevertheless, the gold price remains highly sensitive to geopolitical news, and volatility is expected to remain elevated amid speculation about a potential US land operation to seize Iran’s key oil export hub on Kharg Island.
XAU/USD daily chart
Gold Seems Vulnerable; 100-day SMA/38.2% Fibo. convergence is key
From a technical perspective, the short-term bias is slightly bearish as the XAU/USD pair remains below the 100-day SMA, which has capped the overnight upward move, suggesting a corrective phase within the broader uptrend. Moreover, the Moving Average Divergence (MACD) indicator remains in negative territory with a line below the signal line, reinforcing the continued bearish momentum. Moreover, the Relative Strength Index (RSI) is hovering around a low of 30 after falling below 30, indicating that bearish pressure is dominating, but short-term oversold conditions may tardy the decline.
Meanwhile, the 100-day SMA coincides with the 38.2% Fibonacci retracement level, which marks a decline from the monthly high, strengthening a key barrier. A daily close above this area would open the door to the 50.0% retracement level at $4,770, where sellers could re-emerge. On the other hand, initial support converges near the Fibo level of 23.6%. retracement level at $4,422 before the recent low at $4,407. A break below this band would expose the $4,300 region, while only a rebound above $4,614 would begin to weaken the current bearish tone.
(The technical analysis for this story was written with the lend a hand of an AI tool.)
