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Gold climbs above $4,050 on retreating USD; upside seems limited amid Fed hike bets
- Gold recovers from the daily low amid a modest USD pullback, though it lacks follow-through.
- Elevated crude oil prices fuel inflation fears and bolster Fed hike bets, undermining the bullion.
- Escalating US-Iran tensions and Trump’s tariffs favor USD bulls, capping the precious metal.
Gold (XAU/USD) builds on its modest intraday bounce and climbs back above the $4,050 level, hitting a fresh daily high during the first half of the European session on Friday amid a modest US Dollar (USD) pullback. The fundamental backdrop, however, warrants some caution before confirming that the pullback from an over two-week high, touched on Wednesday, has run its course and positioning for any meaningful upside. Crude oil prices remain elevated amid escalating US-Iran tensions, fueling inflation fears and bolstering expectations of higher-for-longer US interest rates. This might continue to act as a tailwind for the USD and keep a lid on the non-yielding bullion.
The US military announced that it has completed another round of strikes against Iran on Thursday, marking the 13th straight night of operations. In a statement, US Central Command (CENTCOM) said that its forces targeted “Iranian military command centers, drone storage facilities, communication networks, coastal surveillance sites, and maritime capabilities.” The attack was aimed at diminishing further the threat Iran poses to civilian mariners and commercial vessels transiting the Strait of Hormuz.
The latest strikes come amid a widening regional confrontation, with Iran and its allies launching retaliatory strikes against US-linked military assets in Kuwait, Bahrain and Jordan. Moreover, Iran-aligned Houthi forces struck two Saudi oil tankers in the Red Sea, describing the action as part of a naval blockade against Saudi Arabia and extending the Middle East war to a second major shipping chokepoint. This exacerbates supply disruption concerns and lifts crude oil prices to a fresh high since June 11.
Investors remain worried that elevated crude oil prices will rekindle inflationary pressure and force major central banks, including the US Federal Reserve (Fed), to adopt a more hawkish stance. Adding to this, data released on Thursday showed that US Jobless Claims fell to the lowest level since September 1969, pointing to a resilient labor market. This should allow Fed officials to keep their focus on containing inflation, which backs the case for at least one interest rate hike move by the end of this year.
Meanwhile, US President Donald Trump imposed sweeping new tariffs ranging from 10% to 12.5% on 60 of the country’s key trading partners, covering 99.4% of US imports. The latest developments threaten to reignite a global trade war, tempering investors’ appetite for riskier assets and further benefiting the Greenback’s reserve currency status. This, in turn, backs the case for an extension of the XAU/USD pair’s pullback from a two-week top, set on Wednesday, as the focus shifts to the FOMC next week.
XAU/USD 4-hour chart
Gold bears have the upper hand while below 200-EMA pivotal resistance
From a technical perspective, this week’s failure near the 200-period Exponential Moving Average (EMA) and the subsequent fall suggest that the recent bounce from the $3,960-$3,959 area, or the monthly low, has run out of steam. Adding to this, the Moving Average Convergence Divergence (MACD) indicator is in negative territory, with the line deeply below zero, while the Relative Strength Index (RSI) sits near 41, hinting that downside momentum remains in play.
Some follow-through selling below the $4,000 psychological mark and the $3,980-$3,975 support will reaffirm the negative outlook, setting the stage for deeper losses. Meanwhile, intraday floors are likely to be determined by prior price reactions rather than well-established indicator-based levels. On the topside, initial resistance is defined by the 200-period EMA at $4,158.08, and only a sustained recovery above this medium-term barrier would start to ease the prevailing downside pressure.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.04% | -0.07% | -0.04% | -0.27% | -0.23% | -0.03% | |
| EUR | 0.09% | 0.00% | 0.00% | 0.00% | -0.23% | -0.21% | 0.01% | |
| GBP | 0.04% | -0.01% | 0.00% | 0.04% | -0.23% | -0.19% | 0.00% | |
| JPY | 0.07% | 0.00% | 0.00% | 0.03% | -0.22% | -0.18% | 0.02% | |
| CAD | 0.04% | -0.01% | -0.04% | -0.03% | -0.25% | -0.22% | -0.01% | |
| AUD | 0.27% | 0.23% | 0.23% | 0.22% | 0.25% | 0.04% | 0.22% | |
| NZD | 0.23% | 0.21% | 0.19% | 0.18% | 0.22% | -0.04% | 0.20% | |
| CHF | 0.03% | -0.01% | -0.01% | -0.02% | 0.00% | -0.22% | -0.20% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
