Gold rebounds as safe-haven flows counter inflation-driven Fed rate concerns
- Gold attracts some dip-buyers during the Asian session on Friday and snaps a two-day losing streak.
- Retreating US bond yields undermine the USD and support the commodity amid safe-haven flows.
- Inflation fears temper Fed rate cut bets and favor the USD bulls, which might cap the precious metal.
Gold (XAU/USD) gains some positive traction during the Asian session on Friday and recovers a part of its losses recorded over the past two days. The US Dollar (USD) pauses a three-day-old rally amid a modest slide in the US Treasury bond yields and turns out to be a key factor lending some support to the precious metal. Moreover, a further escalation of conflicts in the Middle East assists the safe-haven commodity to attract dip-buyers near the lower boundary of the trading range held over the past two weeks or so.
Iran’s new supreme leader, Mojtaba Khamenei, warned during his first public statement that all US military bases in the region should be immediately closed or will be attacked. Khamenei further added that attacks against US bases in the region would continue, even though Iran believes in goodwill with its neighbors. US President Donald Trump, on the other hand, said that stopping the evil empire in Iran was of greater importance to him than Oil prices. In fact, Crude Oil prices have been climbing since the start of the US-Israel war on Iran.
Adding to this, supply disruption fears due to the closure of the Strait of Hormuz have been fueling concerns about a surge in inflation, which has forced investors to rapidly scale back bets on Fed interest rate cuts in 2026. This should act as a tailwind for the US bond yields and the USD, which, in turn, should keep a lid on any meaningful appreciation for the non-yielding Gold. Furthermore, traders might opt to wait for the release of the US Personal Consumption Expenditures (PCE) Price Index, due later during the North American session.
The crucial inflation data will play a key role in influencing market expectations about the Fed's policy outlook amid growing worries about a war-driven spike in consumer prices. This, in turn, would drive the USD demand and provide some meaningful impetus to the Gold price. The focus, however, remains on geopolitical developments. Nevertheless, the XAU/USD pair seems poised to register losses for the second straight week. Moreover, the aforementioned mixed fundamentals warrant caution before placing aggressive directional bets.
XAU/USD 4-hour chart
Gold continues to find some support near 200-period EMA on H4
The commodity once again rebounds from the vicinity of the 200-period Exponential Moving Average (EMA) support on the 4-hour chart. This keeps the broader uptrend structure intact despite recent pullbacks and warrants caution for the XAU/USD bears.
Meanwhile, the Moving Average Convergence Divergence (MACD) line remains below its signal line and below the zero mark, yet the latest contraction in negative readings hints at fading bearish momentum rather than fresh downside extension. The Relative Strength Index (RSI) near 44 stays below the 50 midline but off oversold territory, consistent with a corrective phase within an underlying upward bias rather than a completed top.
Immediate support emerges around $5,090, where recent intraday lows align just above the 200-period EMA on the 4-hour chart near $5,039, forming a key demand band; a break below this zone would expose deeper support toward $5,000. On the upside, initial resistance appears at the recent swing high near $5,160, with a sustained break opening the way toward the $5,200 region and then the late-stage peak near $5,230.
A recovery through $5,160–$5,200 would likely pull the MACD back toward the zero line and push the RSI closer to 50, reinforcing the bullish tilt, while failure to defend the $5,090–$5,039 support cluster would shift the focus to a more neutral or even bearish 4-hour outlook.
(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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