Gold Falls Below Key Support as Fed Hike Bets and Iran Tensions Boost Dollar

Traders' Opinions

Summary:

Gold remains under heavy pressure below the $4,400 mark as escalating US-Iran tensions, rising Treasury yields, and mounting expectations for tighter global monetary policy continue to strengthen the US Dollar and weaken appetite for the non-yielding precious metal.

SELL XAUUSD

Close Time

CLOSED

4383.00

Entry Price

4200.00

4465.00

4456.91 +1.07 +0.02%

820.0

Pips

Loss

4200.00

4465.13

Exit Price

4383.00

Entry Price

4465.00

Gold prices struggled to regain meaningful traction during Thursday’s European trading session, with XAU/USD hovering below the psychologically important $4,400 level after touching fresh two-month lows earlier in the day. The precious metal remains trapped in a firm bearish structure as a powerful combination of geopolitical uncertainty, surging US Treasury yields, and increasingly hawkish global central bank expectations continue to favor the US Dollar over the non-yielding yellow metal.

At the time of writing, bullion was attempting a modest rebound following an aggressive selloff that pushed prices beneath the closely watched 200-day Simple Moving Average (SMA), a major technical development that could signal a deeper corrective phase ahead for Gold. While safe-haven demand traditionally supports bullion during periods of geopolitical instability, the current market environment has instead driven investors toward the Greenback as escalating tensions in the Middle East reinforce the Dollar’s reserve currency appeal.

Investor sentiment deteriorated after reports emerged that the United States carried out fresh military strikes inside Iran late Wednesday. According to a US official cited by Reuters, the operation targeted Iranian military infrastructure believed to pose a direct threat to American personnel and commercial shipping routes near the Strait of Hormuz. The same official confirmed that US forces intercepted multiple Iranian drones in the region, further highlighting the increasingly fragile security environment surrounding one of the world’s most strategically important energy corridors.

The renewed military activity comes at a particularly sensitive moment for global markets, which had previously begun pricing in hopes of a diplomatic breakthrough between Washington and Tehran. Those expectations weakened significantly after US President Donald Trump delivered a more confrontational tone regarding ongoing negotiations. Trump stated that he remained dissatisfied with the current terms under discussion and emphasized that the United States would not be pressured into accepting a rushed agreement.

In my view, the shift in rhetoric from Washington represents a significant blow to market confidence. Investors had become increasingly optimistic that the months-long conflict was approaching some form of negotiated de-escalation, particularly following tentative reports of progress surrounding the Strait of Hormuz and broader ceasefire discussions. However, the latest military developments and political messaging now suggest that geopolitical risks may remain elevated far longer than markets initially anticipated.

The ongoing disagreement over Iran’s nuclear ambitions and maritime control in the Persian Gulf continues to inject a strong geopolitical risk premium into global markets. Yet rather than boosting Gold in the traditional sense, the uncertainty is primarily fueling demand for the US Dollar and US government debt, especially as investors increasingly anticipate tighter monetary policy from the Federal Reserve and other major central banks.

Meanwhile, energy markets have also begun reacting to the renewed instability. Crude Oil prices recovered modestly from recent multi-week lows as traders reassessed the potential for supply disruptions in the Middle East. The rebound in Oil prices has revived concerns that energy-driven inflation could once again become a persistent challenge for policymakers, particularly at a time when inflationary pressures had only recently begun showing signs of moderation.

Those inflation concerns have materially shifted interest rate expectations in recent sessions. According to CME FedWatch projections, markets are now pricing in nearly a 50% probability that the Federal Reserve could raise interest rates by an additional 25 basis points before year-end. Expectations for another potential rate increase in early 2027 have also risen sharply following a series of hawkish remarks from influential Federal Open Market Committee (FOMC) officials.

That repricing has triggered another strong move higher in US Treasury yields, further undermining Gold’s attractiveness. As a non-interest-bearing asset, Gold typically struggles in environments where real yields and borrowing costs are rising, particularly when accompanied by a resilient US Dollar.

Technical Analysis

From a technical perspective, gold remains under sustained bearish pressure as price action continues to trade within a clearly defined descending structure on the 4-hour chart. The broader market structure reflects a consistent pattern of lower highs and lower lows, reinforced by a descending trendline that has capped upside recoveries throughout the recent decline. Sellers remain firmly in control, with repeated failures near resistance zones confirming ongoing downside momentum.

Price has now broken decisively below several key horizontal support areas, most notably the 4,560–4,580 region, which previously acted as an important consolidation base. This breakdown significantly weakens the near-term outlook and suggests that bearish continuation remains the dominant scenario. The recent rejection from the descending trendline further validates the strength of dynamic resistance and highlights the market’s inability to sustain bullish retracements.

In the short term, the 4,440–4,460 region now represents immediate resistance. Any corrective rebound toward this zone is likely to attract renewed selling interest unless buyers can reclaim and hold above it decisively. A sustained move above this resistance area would be required to ease immediate bearish pressure and potentially trigger a broader recovery toward the descending trendline near the 4,500–4,520 region. However, as long as price remains below the trendline structure, rallies are likely to be viewed as corrective rather than trend reversing.

On the downside, bearish momentum remains focused on a continuation toward the 4,300 support zone, which represents the next major horizontal level visible on the chart. A sustained breakdown beneath this region would likely accelerate downside momentum and expose the 4,200–4,160 area, aligning with the projected bearish path indicated by current price structure. Such a move would confirm a deeper extension of the prevailing downtrend and reinforce bearish market sentiment.

Momentum conditions continue to favor sellers. The Relative Strength Index (RSI) is likely trading below the neutral 50 threshold, reflecting weakening buying momentum and persistent bearish pressure. While short-term oversold conditions may trigger intermittent corrective rebounds, momentum has not yet shown signs of a meaningful bullish divergence capable of signaling trend exhaustion.

Meanwhile, the Moving Average Convergence Divergence (MACD) remains below the zero line, with bearish momentum still dominant despite signs of temporary consolidation. The flattening of downside momentum suggests that the market may experience short-lived retracements, but the broader technical structure continues to favor further downside unless major resistance levels are reclaimed.

TRADE RECOMMENDATION

SELL GOLD

ENTRY PRICE: 4383.00

STOP LOSS: 4465.00

TAKE PROFIT: 4200.00

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