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- Falling Treasury yields support Gold’s recovery.
- Oil pullback eases inflation fears despite weekly crude gains.
- Fed decision, GDP and PCE data drive next catalyst.
Gold price (XAU/USD) drifts higher on Friday as the Greenback stands firm, even as growing speculation that the US-Iran war may last longer than expected could, in the end, hurt the prospects of the yellow metal. The XAU/USD trades at $4,065, up 0.38%.
XAU/USD gains as softer US yields counter Fed hike bets
The US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, is slightly higher at 101.46 and poised to end the week with gains of over 0.60%. The yellow metal is also being propelled by the decline in US Treasury yields, with the 10-year benchmark note dropping three basis points to 4.667%.
The last tranche of geopolitical news hasn’t changed the needle in the Gulf War. Reports said Pakistan is looking to resume US-Iran talks at China’s urging. Meanwhile, Trump revealed that he is losing patience over Iran and confirmed that China and Russia are not giving or selling weapons to Iran.
Friday’s schedule was light with US business activity steady. The S&P Global Manufacturing PMI dropped slightly from 53.9 to 53.8, falling short of the expected 54.5. Meanwhile, the Services PMI rose from 51.2 to 53.6, surpassing forecasts of 51, helped by the World Cup held in the country.
Bullion’s advance is also propelled by easing Oil prices. West Texas Intermediate (WTI), the US Crude benchmark, is down 3.83% at $88.79, but is set to finish the week with gains of over 8.50%.
Money markets continued to increase the odds for a rate hike by the Federal Reserve (Fed) at next week’s meeting. On July 29, the Fed is projected to keep rates unchanged. There is a 59% chance of the US central bank standing pat, but a 25-basis-point (bps) rate hike has nearly a 41% chance.
For the September meeting, the odds of a rate increase are at 84%, according to Prime Terminal data.
Besides next week’s Fed meeting, traders will eye US Retail Sales and Durable Goods Orders, as well as jobs data, Gross Domestic Product (GDP) figures for Q2 and the Personal Consumption Expenditures report.
XAU/USD technical outlook: Gold drifts higher, but faces key resistance at $4,100
Gold’s downtrend remains intact as the market structure would be compromised until XAU/USD climbs above the June 17 cycle high seen at $4,382. Further signs of tailwinds for the downtrend are that the 50, 100, and 200-day Simple Moving Averages (SMAs) lie above the spot price of the yellow metal, and that sellers are dragging prices back below a resistance trendline.
Momentum as well, continues to push lower, with the Relative Strength Index (RSI) remaining bearish. Hence, the path of least resistance is downward.
The first support is $4,000, followed by the current year-to-date (YTD) low of $3,941. A breach of those two levels paves the way to challenge the October 28, 2025, low of $3,886, with further support seen on the swing high-turned-support at $3,500, hit on April 22, 2025.
Conversely, if buyers aim for higher prices, they need to surpass $4,100. Above this, the weekly high of $4,165 is the next target, followed by the $4,200 resistance.
