Gold Price Forecast: XAU/USD hovers below $4,000 with the YTD low at hand
- Gold ticks up from session lows at the $3,965 area but remains capped below the $4,000 level.
- Growing tensions between the US and Iran and rising Oil prices keep weighing on Gold
- XAU/USD is on track for a 3% weekly decline, with the YTD low of $3,941 at a short distance.
Gold (XAU/USD) shows moderate gains on Friday, but remains close to the year-to-date lows, at the $3,940 area, with upside attempts capped below the $4,000 psychological level for now. The precious metal is set for a 3% weekly decline, as the resumed hostilities between the US and Iran and the higher Oil prices have offset the positive impact of lower US Treasury yields.
Bullion tumbled on Thursday as tensions in Iran escalated with US President Donald Trump threatening to target civilian infrastructure, like power plants and bridges. Tehran, in turn, flagged the closure of the Strait of Bab el-Mandeb, a move that would strangle Oil supply further and bring the global economy to the brink of recession.
Technical Analysis: The YTD low of $3,941 is coming under pressure
XAU/USD trades remain on a bearish trend from February's highs with no clear sign of a trend shift on the horizon, other than the bullish divergence in the Relative Strength Index (RSI). Momentum indicators in the 4-hour remain in bearish territory, with the mentioned RSI below 40 and the Moving Average Convergence Divergence (MACD) just below zero, suggesting that rallies will find sellers.
The psychological $4,000 level is holding bulls at the time of writing, closing the path towards the trendline resistance at $4,075 and mid-July highs in the $4,100 area. A clear break of these levels is needed to ease bearish pressure and shift the focus towards July's peak, in the $4,200 area.
On the downside, the year-to-date low, at $3,941, remains at a short distance. Further down, the October 2025 low, at $3,886, emerges as the next target, ahead of the 127.2% Fibonacci extension of the late-June downleg, at the $3,830 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Recommended Articles
