Gold is nursing losses early Thursday, looking to retest seven-month lows near $3,950, following a failed recovery attempt above the $4,000 threshold.
Gold: More downside in store?
As analysed a week ago, Gold remains a lose-lose trade amid increased bets of at least two US Federal Reserve (Fed) interest rate hikes this year, with the first one as early as September.
Elevated inflation levels, combined with a surprisingly hawkish-sounding new Fed Chair, Kevin Warsh, have doubled down on Fed rate hike bets, bolstering the US Dollar (USD) uptrend while spelling doom for the non-yielding Gold.
The Greenback also remains underpinned by expectations of a stronger US economy and the persistent demand for safe havens, even amidst the US-Iran peace deal and Oil prices easing back to pre-Middle East war levels.
Markets continue to remain wary about the US-Iran peace deal, especially after conflicting messages from both sides on the Iranian nuclear program and the control over the Strait of Hormuz.
US President Donald Trump said Wednesday that Iran has assured that it is not imposing tolls, insurance fees or other charges on ships passing through the Strait of Hormuz, dismissing reports to the contrary as “fake news.”
Meanwhile, the Iranian Islamic Revolutionary Guards Corps (IRGC) said on Thursday that “safe transit through the Strait of Hormuz is possible only via routes designated by Iran.”
Further, Reuters reported on Wednesday that Iran is set to propose charges related to security, navigation and environmental protection to transit through the Strait.
Earlier this week, Trump claimed that Iran has “fully and completely” agreed to the highest level of nuclear inspections long into the future. However, Iran’s President Masoud Pezeshkian clarified that “the discussion over our missiles does not exist in the MoU, and it never will.”
Beyond geopolitics, the focus today will remain on the US core Personal Consumption Expenditures (PCE), the Fed’s preferred inflation measure, due for May. The inflation data will be closely scrutinized to reaffirm Fed rate hike bets, despite the recent pullback in Oil prices.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $3,969.55 with a firmly bearish near-term bias, as spot holds well beneath all its major simple moving averages (SMAs). The 21-day SMA at $4,279.88 is the first cap on any rebound, while the 50-day and 200-day SMAs clustered just above $4,470 keep the broader downtrend intact. The 100-day SMA, up at $4,690, marks a more distant dynamic barrier, and the Relative Strength Index (14) sitting around 29 suggests oversold conditions, hinting that some room for further downside as the broader tone remains negative.
Adding credence to the bearish potential, the 50-day SMA is on the verge of crossing the 200-day SMA from above, which if confirmed on a daily closing basis would validate a Death Cross.
On the topside, initial resistance is located at the 21-day SMA near $4,280, followed by a dense supply zone around the 200-day SMA at $4,474 and the 50-day SMA at $4,483. A sustained break above that cluster would be needed to ease bearish pressure and expose the 100-day SMA around $4,690 next. With no nearby moving-average supports on the daily chart, any interim floor is likely to be defined by price action and prior swing lows rather than indicators, leaving XAU/USD vulnerable to further downside until buyers can reclaim at least the $4,280 region.
(The technical analysis of this story was written with the help of an AI tool.)
