Gold holds above $4,500 on softer USD, bearish bias persists

Gold (XAU/USD) reverses a modest Asian session dip to the $4,420 area and climbs back above the $4,500 mark, looking to build on Friday’s strong gains of over 2.50%. The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, retreats slightly from the vicinity of the monthly high and turns out to be a key factor offering some support to the commodity. However, expectations of higher interest rates globally might keep a lid on any meaningful appreciation for the non-yielding yellow metal.

Investors now seem convinced that major central banks will adopt a more hawkish stance as the war-driven surge in energy prices continues to fuel inflationary fears. The fears were further fueled by reports that the US is considering a ground invasion of Iran and the entry of Yemen’s Houthis. The Iran-backed militant group launched missile and drone attacks on Israel in the space of less than 24 hours and warned that further attacks would follow in the coming days. This opens a new front in a rapidly escalating conflict that has rattled the global economy, raising the risk of further disruption to global trade passing through the Bab el-Mandeb Strait off the Red Sea. This, along with the effective closure of the Strait of Hormuz, remains supportive of elevated Oil prices and threatens to rekindle inflationary pressures.

Meanwhile, the Organization for Economic Co-operation and Development (OECD) raised its forecast for US inflation and now estimates headline prices to rise at a 4.2% rate, far above its prior forecast and the Fed’s expectations for 2.7%. Moreover, the OECD said that its baseline forecast is the Fed keeping the policy rate flat through 2027. That said, the CME Group’s FedWatch tool indicates over a 50% chance of a rate increase by the US central bank in 2025. This favors the USD bulls and warrants caution before positioning for any further upside for the Gold price. Even the technical setup makes it prudent to wait for strong follow-through buying before confirming that the XAU/USD pair has formed a near-term bottom around the $4,100 mark, or the lowest since November 2025, touched earlier this month.

XAU/USD daily chart

Gold struggles to lure buyers amid a bearish technical setup

The range-bound price action witnessed over the past week or so might be categorized as a bearish consolidation phase amid the recent breakdown below the 100-day Simple Moving Average (SMA). Last week’s solid rebound from the very important 200-day SMA pivotal support, however, warrants some caution before placing fresh bearish bets.

Meanwhile, the Moving Average Convergence Divergence (MACD) line remains below its signal line and in negative territory, with a still-negative histogram, reinforcing persistent downward momentum. The Relative Strength Index (RSI) hovers in the mid-30s after recovering from oversold readings, hinting that bearish pressure is easing but not yet reversing.

Immediate resistance emerges near the 100-day SMA around $4,630, with a break above this area needed to open the way toward $4,880 as the next upside barrier. On the downside, initial support stands at the recent low near $4,380, where prior selling stalled, followed by a lower support zone at $4,300 if sellers extend control.

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