Gold Price Forecast: XAU/USD attempts to bounce up from the $4,000 psychological area
- Gold edges higher following a $400 sell-off, but remains capped below $4,100 so far.
- Rising tensions in Iran and higher expectations of Fed hikes are weighing on precious metals.
- XAU/USD has reached oversold levels at lows right above the $4,000 psychological level.
Gold (XAU/USD) trades with minor gains on Thursday but remains struggling below $4,100, amid geopolitical uncertainty and rising bets on Federal Reserve (Fed) rate hikes. The precious metal, however, has reached oversold levels after a $400 selloff over the last three days and might find support at the $4,000 psychological area.
Geopolitical tensions remain a headwind for a significant Gold recovery. The US and Iran exchanged attacks for the second consecutive day, and US President Donald Trump threatened to hit the country harder if Tehran refuses to sign a deal. The CNN reported that US-Iran negotiations are still on track, citing diplomatic sources, but the market sentiment remains weak.
On Wednesday, US Consumer Price Index (CPI) figures confirmed that yearly inflation accelerated to the highest level in more than three years in May, reaching levels more than twice the Federal Reserve’s (Fed) 2% target. These figures have endorsed the Market view that the central bank will be forced to hike rates later in the year, which sent US yields jumping and the US Dollar up with them.
Technical Analysis: Gold might find support at the $4,000 area
XAU/USD trades at $4,092, amid a strong downside bias, holding well beneath the 200-day simple moving average (SMA). The Relative Strength Index (RSI) in the daily chart is in oversold territory, hinting at an overextended decline as prices approach the $4,000 psychological area, although the Moving Average Convergence Divergence (MACD) remains deep in negative territory.
Immediate support is at the daily low of $4,023, ahead of mid-November 2025 lows, right above the mentioned $4,000 level. Further down, the late-October 2025 low, near $3,884, emerges as the next target.
Upside attempts, on the contrary, remain capped below the previous year-to-date low around $4,100. Bulls should breach this level and the bottom of the previous downtrend channel, now around 4,200, to ease downside pressure and test Tuesday's high at the previous support area near $4,360.
(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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