Gold Price Falls but Holds Above $4,000 as Iran Tensions Revive US Dollar Demand
Gold prices extended their decline on Friday after a two-day recovery, slipping well below the $4,100 mark as the US Dollar (USD) regained momentum. Escalating geopolitical tensions between the United States and Iran revived inflation concerns and reinforced expectations that the Federal Reserve could still raise interest rates later this year, boosting the greenback and weighing on the precious metal. Meanwhile, the technical outlook continues to favor sellers, signaling the potential for further downside.
On the daily chart, XAU/USD was trading at $4,082.83, maintaining a bearish short-term bias as the pair remains below its key moving averages. The 50-day Simple Moving Average (SMA) at $4,185.76, the 100-day SMA at $4,426.31, and the 200-day SMA at $4,490.85 all remain above current prices, indicating that recent rebounds are still part of a broader corrective phase. Meanwhile, the 21-day SMA at $4,073.95 provides immediate dynamic support.
The Relative Strength Index (RSI 14) stands near 48.3, slightly below the neutral 50 level, suggesting weakening momentum while reinforcing the view that gold remains trapped in a broader bearish consolidation.
On the upside, the first major resistance is located at the 50-day SMA near $4,185.76. A decisive daily close above this level would ease immediate selling pressure and pave the way toward the 100-day SMA at $4,426.31, followed by the 200-day SMA at $4,490.85. On the downside, initial support is found at the 21-day SMA around $4,073.95. A sustained break below this level would expose lower support zones and confirm that sellers have regained control of the daily trend.
Gold failed to hold above the $4,100 psychological level despite closing above it on Thursday, as the US Dollar Index staged a solid rebound from a six-week low against a basket of major currencies.
Although Pakistani mediators confirmed that negotiations between Tehran and Washington remain ongoing, renewed military escalation following a heavy US strike on Iran in retaliation for another attack targeting American forces in Jordan revived safe-haven demand for the US dollar.
In response, Iranian Parliament Speaker Mohammad Bagher Ghalibaf wrote on X that, "Americans have become accustomed to compensating for the blows they receive on the battlefield by shedding the blood of innocent people. They will pay the price."
The US dollar also drew additional support from persistent expectations that the Federal Reserve could still deliver another interest rate hike later this year, even though Fed Chair Kevin Warsh offered no clear guidance on additional monetary tightening during Wednesday's post-policy meeting press conference.