Gold holds in tight range as Iran tensions and mixed Fed signals curb upside
- Gold lacks any follow-through buying as bulls seem hesitant amid mixed fundamental cues.
- Iran tensions underpin the USD, though reviving Fed rate cut bets support the commodity.
- The technical setup further warrants caution before positioning for any meaningful upside.
Gold (XAU/USD) struggles to build on the previous day's move higher and oscillates in a narrow band during the Asian session on Friday. The commodity manages to hold comfortably above the $4,600 mark, though it remains on track for a second straight weekly decline. The US Dollar (USD) steadies following Thursday's slump to a one-and-a-half week low amid geopolitical risks on the back of stalled US-Iran peace talks. Furthermore, the US Federal Reserve's (Fed) hawkish tilt offers some support to the USD and contributes to capping the non-yielding yellow metal.
US President Donald Trump rejected an Iranian proposal to open the Strait of Hormuz and lift the blockade, while postponing nuclear issues to a later stage. Trump further said that he's going to keep Iran under a naval blockade until the regime agrees to a deal that addresses US concerns about its nuclear program. Furthermore, reports suggest that the US is considering new military strikes on Iran. This fuels worries about a further escalation of tensions between the US and Iran, which underpins the USD's reserve currency status and acts as a headwind for the Gold price.
Meanwhile, the Fed held its key policy rate unchanged at 3.50%-3.75% on Wednesday, and the decision saw the highest number of dissents since 1992, with three policymakers voting against the accommodative tone in the policy statement. Adding to this, the US macro data released on Thursday indicated that inflation accelerated in March and the continued economic resilience, reaffirming expectations that the US central bank could keep rates unchanged well into next year. This is seen as another factor offering support to the Greenback and undermining the Gold price.
The US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index rose 0.7% MoM in March, and the yearly rate accelerated to 3.5% from 2.8% in February. Moreover, the core gauge that excludes volatile food and energy prices climbed 3.2% on a yearly basis, compared to the 3% increase recorded in the previous month. Separately, the advance GDP estimate showed that the US economy expanded at an annual rate of 2.0% in the first quarter of 2026, marking a notable pickup compared to the revised 0.5% growth rate recorded in the fourth quarter of 2025.
However, the chance of at least one 25-basis-points (bps) rate cut by the Fed in 2026 jumped to over 15% from a meager 1.3% probability the previous day. This is holding back the USD bulls from placing aggressive bets and helping limit the downside for Gold. The market focus now shifts to important US macro releases scheduled at the beginning of a new month, starting with the ISM Manufacturing PMI later this Friday. Apart from this, developments surrounding the Middle East crisis should influence the USD price dynamics and provide some meaningful impetus to the precious metal.
XAU/USD 1-hour chart
Gold needs to surpass 38.2% Fibo. barrier near $4,650 to back the case for any further upside
The overnight strength beyond $4,600 and the 100-hour Simple Moving Average (SMA) prompted some intraday short-covering. The subsequent move up stalled ahead of $4,650, near the 38.2% Fibonacci retracement level of the downfall from the April swing high. Meanwhile, the Relative Strength Index (RSI) at 58.33 suggests firm but not overbought momentum, while the Moving Average Convergence Divergence (MACD) indicator remains marginally negative. Momentum indicators hint that bullish attempts are tentative despite price holding over the short-term trend reference.
Hence, it will be prudent to wait for a sustained break through the 38.2% Fibo. retracement at $4,651.19, before positioning for an extension of this week's goodish rebound from the $4,500 neighborhood, or a one-month low. The 50% retracement at $4,696.20 could act as the next barrier if buyers extend the advance. On the downside, immediate support is seen at the 100-hour SMA at $4,623.78, and a break below this would expose the 23.6% Fibo. level at $4,595.49, with the broader swing low at $4,505.46 coming into view on sustained weakness.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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