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Gold Hits Two-Week Low as Iran Tensions and Inflation Fears Boost USD
Gold prices dropped to a two-week low around the $4,758–$4,757 range during the Asian session, putting the precious metal on track for its first weekly loss in five weeks. Rising geopolitical tensions between the United States and Iran, particularly around the Strait of Hormuz, have kept investors cautious. At the same time, renewed inflation concerns are reducing expectations of a more dovish stance from the Federal Reserve, strengthening the US Dollar and weighing on gold prices.
From a technical perspective, gold maintains a short-term bearish bias as it trades below the 200-period Exponential Moving Average (EMA). The price is now attempting to break below the ascending channel support near $4,680.47, signaling a potential loss of bullish momentum and opening the door for further downside.
Momentum indicators also reinforce the bearish outlook. The Relative Strength Index (RSI) stands at 35.72, approaching oversold territory, while the Moving Average Convergence Divergence (MACD) remains in negative territory below the zero line at around -4.92. These signals suggest continued selling pressure rather than an imminent reversal.
If the bearish trend persists, XAU/USD could face deeper declines. On the upside, immediate resistance is seen near the former channel support at $4,680.47, followed by stronger resistance at the 200-period EMA around $4,778.44. A more significant barrier lies near the upper boundary of the ascending channel at approximately $4,901.82. Only a sustained move above these levels would ease the current bearish sentiment.
Geopolitical tensions continue to escalate as the US naval blockade of Iranian ports intensifies. Iran’s Foreign Minister, Abbas Araghchi, has labeled the blockade as an act of war, while senior negotiator Mohammad Bagher Ghalibaf stated that any ceasefire would be meaningless if maritime restrictions remain in place. Meanwhile, US President Donald Trump has ordered the Navy to take decisive action against vessels laying mines in critical shipping routes. These developments diminish hopes for de-escalation and reinforce the US Dollar’s strength as a global reserve currency, adding pressure on gold.
At the same time, ongoing disruptions to energy supply routes are supporting elevated crude oil prices. This raises concerns about a potential surge in global inflation, which could push major central banks—including the Federal Reserve—toward a more hawkish policy stance. Current market expectations suggest only one 25 basis point rate cut by the Fed in 2026. This outlook is boosting US Treasury yields and the US Dollar, further reducing the appeal of non-yielding assets like gold.
Looking ahead, the US economic calendar features the revised University of Michigan Consumer Sentiment Index. However, market focus remains on geopolitical developments, which are likely to drive volatility and create trading opportunities in gold. Despite this, the overall fundamental backdrop suggests that the path of least resistance for XAU/USD remains to the downside, with any short-term rallies likely to be viewed as selling opportunities.