Gold (XAU/USD) remains on the back foot through the Asian session on Thursday, though it manages to hold above the $4,700 mark and, for now, seems to have stalled the previous day’s pullback from a three-week high. Skepticism over the durability of the US-Iran ceasefire offers some support to the US Dollar (USD) and acts as a headwind for the commodity. However, the US Federal Reserve’s (Fed) dovish outlook holds back the USD bulls from placing aggressive bets and helps limit the downside for the non-yielding yellow metal.
Israel carried out a large wave of air strikes across Lebanon, saying that the ceasefire was not extended to Lebanon due to the role of the armed group Hezbollah. The White House also confirmed that Lebanon is not part of the two-week ceasefire drawn up between Iran and the US. In response, Iran once again shut down shipping traffic through the critical Strait of Hormuz and threatened to withdraw from the ceasefire if Israel continues to attack Lebanon. This keeps a lid on the optimism and supports the USD, undermining the Gold price.
Meanwhile, Minutes from the March 17–18 FOMC meeting released on Wednesday revealed a higher-for-longer stance, with officials in no rush to cut interest rates amid upside risks to inflation stemming from Middle East energy price shocks. That said, policymakers still signaled one rate reduction by the end of this year and another in 2027, though the timing remains unclear. This caps the attempted USD recovery from a nearly one-month low, touched the previous day, and turns out to be a key factor offering some support to the Gold price.
Traders also seem hesitant ahead of the release of the crucial US Personal Consumption Expenditures (PCE) Price Index – the Fed’s preferred inflation gauge – later during the North American session. Apart from this, the US Consumer Price Index (CPI) report on Friday would be looked for more cues about the Fed’s policy outlook and drive the USD price, providing some meaningful impetus to the Gold price. Nevertheless, the mixed fundamental backdrop warrants caution before positioning for a firm intraday direction for the XAU/USD pair.
XAU/USD 4-hour chart
Gold could accelerate the downfall once the $4,700 mark is broken decisively
The XAU/USD pair holds beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 50.0% retracement of the March downside, keeping a bearish bias intact. Adding to this, the Moving Average Convergence Divergence (MACD) indicator slips into negative territory, and the Relative Strength Index (RSI) hovers around a neutral 52, hinting at waning bullish momentum rather than a fresh impulsive leg higher.
Meanwhile, initial support emerges at the 38.2% Fibo. retracement around $4,604, with further cushions at the 23.6% level near $4,412 and the prior swing low region close to $4,102, where buyers would be expected to show more interest. On the topside, immediate resistance is located at the 50.0% Fibonacci retracement at $4,758, followed by a heavier barrier in the $4,895–$4,914 zone where the 200-period SMA and the 61.8% retracement converge, ahead of higher hurdles at the $5,000 psychological mark.
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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