Gold Prices Stay Under Pressure Below $4,050 as Hawkish Fed Expectations and Stronger US Dollar Weigh
Gold prices remained under selling pressure for a second consecutive session, extending losses below the $4,050 mark during Friday's Asian trading. Rising geopolitical tensions between the United States and Iran continued to keep crude oil prices elevated, fueling inflation concerns and reinforcing expectations that the Federal Reserve will maintain higher interest rates for longer. The outlook has supported the US Dollar (USD), which climbed to its highest level in nearly a month on Thursday, reducing the appeal of non-yielding assets such as gold.
Technical Outlook Signals Further Downside for Gold
From a technical perspective, gold's failure to break above the 200-period Exponential Moving Average (EMA) earlier this week, followed by the latest decline, suggests that the recent rebound from the $3,960–$3,959 monthly low has lost momentum.
Momentum indicators continue to favor the bears. The Moving Average Convergence Divergence (MACD) remains firmly in negative territory with its signal lines well below zero, while the Relative Strength Index (RSI) hovers around 41, indicating that bearish momentum is still intact.
A decisive break below the key psychological level of $4,000, followed by support at $3,980–$3,975, would reinforce the bearish outlook and expose gold to deeper losses. In the near term, intraday price action is likely to be driven by previous reaction levels rather than established technical indicators.
On the upside, immediate resistance is located at the 200-period EMA, currently around $4,158.08. Only a sustained move above this critical resistance level would ease the current bearish pressure and improve the short-term outlook for XAU/USD.
Middle East Escalation Drives Oil Prices Higher
Geopolitical tensions continued to intensify after the U.S. military confirmed it had completed another round of strikes against Iran on Thursday, marking the 13th consecutive night of military operations.
According to the U.S. Central Command (CENTCOM), the strikes targeted Iranian military command centers, drone storage facilities, communications infrastructure, coastal surveillance sites, and maritime capabilities. Washington said the operations were intended to reduce threats to civilian shipping and commercial vessels transiting the Strait of Hormuz.
The conflict widened further as Iran and its regional allies reportedly launched retaliatory attacks against U.S.-linked military assets in Kuwait, Bahrain, and Jordan. Meanwhile, Iran-backed Houthi forces attacked two Saudi oil tankers in the Red Sea, describing the operation as part of a naval blockade against Saudi Arabia. The attacks raised concerns over global energy supply disruptions and pushed crude oil prices to their highest level since June 11.
Higher Oil Prices Strengthen the Case for a Hawkish Fed
Investors remain concerned that rising energy prices could reignite inflationary pressures, forcing major central banks—including the Federal Reserve—to maintain a more hawkish policy stance.
Supporting that view, data released on Thursday showed U.S. Initial Jobless Claims fell to their lowest level since September 1969, highlighting the resilience of the labor market. The stronger-than-expected employment data gives Federal Reserve policymakers additional room to prioritize inflation control, increasing expectations for at least one more interest rate hike before year-end.
Trump's New Tariffs Boost Safe-Haven US Dollar
Adding to market uncertainty, U.S. President Donald Trump announced sweeping new tariffs ranging from 10% to 12.5% on imports from 60 major trading partners, covering approximately 99.4% of total U.S. imports.
The move has revived fears of a renewed global trade war, dampening risk appetite across financial markets while reinforcing the US Dollar's status as the world's primary reserve currency.
A stronger dollar, combined with rising Treasury yields and expectations of tighter monetary policy, continues to pressure gold prices. Unless geopolitical risks intensify enough to trigger stronger safe-haven demand, XAU/USD could remain vulnerable to further downside ahead of next week's FOMC meeting.