Gold (XAU/USD) attracts sellers for the third straight day on Friday and continues to weaken below the $4,200 level, hitting a modern weekly low during the Asian session. The US dollar (USD) remains steady near its highest level since May 2025 amid a hawkish stance from the US Federal Reserve (Fed), which in turn crowds out the outflow of unprofitable bullion. Moreover, the uncertainty surrounding the next round of US-Iran negotiations turns out to be another factor strengthening the status of the USD reserve currency and putting additional pressure on this raw material.
At the end of its first meeting under modern Fed Chairman Kevin Warsh, the US central bank decided to leave its benchmark interest rate unchanged at its current target range of 3.5-3.75%. However, a so-called scatter plot showed that nine of the 19 Fed members involved believe that if inflation remains unchanged, they will have to raise policy rates this year. Moreover, Kevin Warsh’s comments at the post-meeting press conference focused mainly on price stability, suggesting that the Fed may be in no rush to cut interest rates even in the face of dwindling economic growth.
According to CME Group’s FedWatch tool, investors are currently pricing in a 70% probability that the U.S. central bank will raise interest rates in September. This keeps U.S. Treasury yields high and continues to support the dollar. Meanwhile, optimism surrounding the U.S.-Iran interim peace agreement is waning as key issues between the two countries remain unresolved. Moreover, US Vice President JD Vance canceled a planned trip to Switzerland for talks with Iran, claiming that the meeting had not yet been finalized. Moreover, Israeli airstrikes in Lebanon threaten to unravel the US-Iran agreement.
Any signs of re-escalation of tensions in the Middle East and lack of progress in US-Iran negotiations could further strengthen the safe-haven USD. Meanwhile, liquidity is likely to remain low due to the US public holiday celebrating National Independence Day in June. Nevertheless, the zloty seems poised to record losses for the third week in a row as the market’s attention remains focused on further geopolitical developments.
XAU/USD daily chart
Gold bears have an advantage when trading below the sturdy 100-day EMA hurdle
From a technical perspective, this week’s repeated failure to break through the 100-day exponential moving average (EMA) and subsequent decline favors XAU/USD bears. Moreover, the relative strength index (RSI) is hovering around 36, reflecting delicate demand rather than complete oversold. Moreover, the Moving Average Divergence (MACD) indicator remains in negative territory with a line below the signal and a subdued histogram, suggesting continued downward pressure.
Meanwhile, the 200-day EMA at $4,358.53 is the first significant resistance and bulls would need a daily close above this level to ease the current downside bias and indicate a more sustained recovery phase. Until then, the XAU/USD pair remains vulnerable to further declines, and further fresh selling will likely be driven by momentum rather than interaction with a specific lower technical level on the daily chart.
(The technical analysis for this story was written with the facilitate of an AI tool.)
Gold FAQs
Gold has played a key role in human history as it has been widely used as a store of value and a medium of exchange. Nowadays, beyond its luster and apply in jewelry, the precious metal is widely viewed as a safe-haven asset, meaning it is considered a good investment in turbulent times. Gold is also widely seen as a hedge against inflation and currency depreciation because it is not tied to any particular issuer or government.
Central banks are the largest holders of gold. To support their currencies in turbulent times, central banks typically diversify their reserves and purchase gold to improve the perceived strength of the economy and currency. High gold reserves may provide a source of confidence in the country’s solvency. According to data from the World Gold Council, central banks added 1,136 tons of gold to their reserves in 2022, worth about $70 billion. This is the highest annual purchase since registration began. Central banks in emerging economies such as China, India and Turkey are rapidly increasing their gold reserves.
Gold has an inverse correlation with the US dollar and US treasury bonds, which are both major reserve assets and secure haven assets. When the dollar depreciates, gold tends to rise, allowing investors and central banks to diversify their holdings in turbulent times. Gold is also inversely correlated with risky assets. A rally in the stock market tends to weaken the price of gold, while sell-offs in riskier markets support the precious metal.
The price may vary due to many factors. Geopolitical instability or fear of a deep recession can quickly cause gold prices to rise due to its safe-haven status. Gold, as a non-yielding asset, tends to rise in lower interest rates, while the higher cost of money tends to weigh on the yellow metal. Still, most of the movements depend on the behavior of the US dollar (USD) when the asset is priced in dollars (XAU/USD). A sturdy dollar tends to keep the gold price in check, while a weaker dollar will likely cause gold prices to rise.
