Gold flat lines above $4,100 as weaker USD clashes with Fed hike bets and Iran risks

• Gold struggles to capitalize on the previous day’s move higher amid mixed cues.
• The less hawkish FOMC Minutes and Iran diplomacy hopes weigh on the USD.
• Prospects for at least one Fed rate hike in 2026 and Iran risks cap the commodity.

Gold (XAU/USD) reverses a modest Asian session dip to the $4,109-$4,108 region on Friday, though it lacks bullish conviction. The US Dollar (USD) selling remains unabated for the third consecutive day in the wake of Wednesday's less hawkish FOMC Minutes and offers some support to the commodity. However, prospects of a US Federal Reserve (Fed) rate hike in 2026 remain active. This, along with geopolitical uncertainties, could limit USD losses, warranting some caution before positioning for an extension of the recovery from a one-week low set on Wednesday.

The minutes from the June 16–17 FOMC meeting, released on Wednesday, revealed that policymakers were divided over the direction of interest rates. The minutes further stated that many participants indicated the appropriate level of the federal funds rate would be within or slightly below the current target range at the end of this year. Fed officials, however, indicated that some policy firming would likely be warranted as the upside risk to inflation remains elevated. Moreover, the CME Group's FedWatch Tool suggests that traders are still pricing in a nearly 85% probability of at least one Fed rate hike by the year-end.

Meanwhile, a fresh escalation of tensions between the US and Iran brings the spotlight back on oil prices and what it could mean for inflation and the global rates outlook. The US Central Command (CENTCOM) said that it carried out airstrikes on Thursday, hitting 90 Iranian military targets – including air defense systems, missile sites and naval logistics infrastructure along Iran's coastline. Iran retaliated by launching missiles and drones at US military installations in Bahrain and Kuwait, and also warned that further American attacks would trigger a wider regional response, significantly complicating diplomatic efforts.

The market anxiety, however, subsided after US President Donald Trump told reporters on Thursday that Iran had called to make a deal with the US. Adding to this, a White House official signaled that the US is still committed to the memorandum of understanding with Iran. The mixed signals keep investors on edge, suggesting that a strong follow-through buying is needed to confirm that the Gold price has formed a near-term bottom. Nevertheless, the XAU/USD pair remains on track to register modest weekly losses as the market focus remains glued to further developments surrounding the US-Iran saga.

XAU/USD daily chart

Gold seems vulnerable while below 200-day SMA and descending channel resistance

The precious metal holds within a broader downward parallel channel and below the 200-day Simple Moving Average (SMA), which keeps the near-term bias bearish despite improving momentum. The channel’s upper boundary near $4,156.03 is the first structural barrier ahead of the 200-day SMA currently around $4,493.66, reinforcing a cap above spot.

Meanwhile, the Moving Average Convergence Divergence (MACD) histogram has turned positive, and the MACD line has pushed above the signal line, hinting at a corrective rebound within the broader downtrend. However, the Relative Strength Index (RSI) around 45 still reflects only modest demand rather than a decisive bullish shift.

On the downside, the current day’s swing low, around $4,109-$4,108, acts as a nearby pivot, with stronger support aligned with the channel floor around $3,758.88, where buyers would be expected to re-emerge if the bearish pressure resumes.

(The technical analysis of this story was written with the help of an AI tool. Know more.)