Gold (XAU/USD) struggles to capitalize on its modest intraday recovery from the $4,800 neighborhood, or its lowest level since February 6, touched during the Asian session on Thursday. The US Dollar (USD) bulls pause for a breather following the previous day’s strong move up and offer some support to the commodity. Furthermore, heightened geopolitical uncertainties turn out to be another factor underpinning the safe-haven bullion. However, the US Federal Reserve’s (Fed) hawkish outlook could limit deeper USD losses and cap the non-yielding yellow metal, warranting caution for bullish traders.
Energy infrastructure in Persian Gulf countries came under attack today following Israeli strikes on Iran’s South Pars natural gas field – the world’s largest. In response, US President Donald Trump issued a stark warning of potential large-scale retaliation tied to energy infrastructure. Adding to this, the Trump administration is reportedly exploring options to expand its military campaign against Iran and is considering deploying thousands of US troops to reinforce its operation in West Asia. This marks a significant escalation in the conflict and continues to weigh on investors’ sentiment, which, in turn, benefits traditional safe-haven assets, including Gold.
Meanwhile, data published by the US Labor Department on Wednesday showed that the headline Producer Price Index (PPI) rose 0.7% in February, following a 0.3% increase in the previous month. Adding to this, the yearly rate jumped to 3.4%, marking the largest 12-month advance since February 2025. Moreover, the US central bank raised the year-end inflation outlook (PCE), citing risks from higher energy prices due to the Iran war. The Fed also upgraded its 2026 growth projection and projected only one rate reduction this year, and one in 2027. This, in turn, favors the USD bulls and should keep a lid on the attempted recovery in the Gold price.
Traders might also opt to wait for more policy updates from the Swiss National Bank (SNB), the Bank of England (BoE), and the European Central Bank (ECB), which should infuse volatility in the financial markets. Apart from this, the US economic data – the usual Weekly Initial Jobless Claims and the Philly Fed Manufacturing Index – might provide some impetus to the Gold price. Nevertheless, the fundamental backdrop warrants some caution before confirming that the XAU/USD pair has formed a near-term bottom and is positioning for a further appreciating move.
XAU/USD 4-hour chart
Gold could attract fresh sellers at higher levels amid a bearish technical setup
Last Friday’s breakdown below the $5,040-$5,035 confluence – comprising the 200-period Exponential Moving Average (EMA) on the 4-hour chart and the 38.2% Fibonacci retracement level of the February-March move higher – was seen as a key trigger for the XAU/USD bears. Moreover, the Moving Average Convergence Divergence (MACD) histogram has turned negative again with the line slipping below the signal line under the zero mark, suggesting renewed downside momentum after a brief pause.
Meanwhile, the Relative Strength Index (RSI) at 27.86 stays below 30, showing oversold conditions, yet the persistent weakness favors selling pressure over a meaningful rebound for now. Hence, any further move up is likely to confront resistance at the $4,919.61 area, where the 50.0% retracement level aligns as the first cap on recovery attempts. This is followed by the 38.2% Fibo. retracement at $5,037.25 near the 200-period EMA, reinforcing a stronger barrier if prices bounce.
On the downside, the recent trough around $4,843 becomes initial support, ahead of the $4,801.97 level at the 61.8% retracement, which would be the next bearish objective if sellers extend their control. A clear break below $4,801.97 would expose the broader $4,634.48 support at the 78.6% retracement, where oversold readings could encourage profit-taking on short positions.
(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.
