$4,000 at sight: Gold bleeding continues as Middle East crisis escalates, Fed hike coming

XAU/USD Current price: $4,110

• The United States and Iran exchanged fire, boosting demand for the safe-haven US Dollar.
• The US Consumer Price Index rose 4.2% YoY in May, fueling speculation of an upcoming interest rate hike.
• XAU/USD challenges the year low at $4,098, looking to test the $4,000 mark.

Spot Gold extends its slump on Wednesday, and approaches the 2026 low posted in March at $4,098. Back then, the XAU/USD suffered a massive three-day sell-off from its all-time high of $5,598, partially explained by long liquidation, yet mostly due to the Oil shock resulting from the Iran war spurring rate hike concerns. Hopes for a conflict resolution helped the precious metal to recover ground, yet sellers capped advances at around $4,900.

Ever since then, Gold has been on the back foot, with attempts to recover resulting in the metal posting lower lows.

The US Dollar (USD) has overshadowed Gold as a safe haven preferred asset due to an additional factor: potential Federal Reserve (Fed) interest rate hikes. An oil supply shortage led to higher prices, which quickly spilled over into inflation. Just today, the United States (US) reported that the Consumer Price Index (CPI) rose at an annualized pace of 4.2% in May, doubling the Fed’s goal. The core CPI, which excludes volatile food and energy prices, rose 2.9% in the same period. Such levels pretty much grant a Fed interest rate hike before the year’s end.

Meanwhile, a ceasefire between the US and Iran seems over: according to the latest on the matter, Iran downed a US Army helicopter earlier this week. Fire exchange resumed, while US President Donald Trump threatened to “hit hard” Iran, although he repeated that they are working on a deal.

XAU/USD short-term technical outlook

In the daily chart, XAU/USD trades around $4,110, extending a bearish phase with price entrenched below the 20-day, 100-day, and 200-day simple moving averages (SMAs), which all sit well above the market and cap the upside. The Relative Strength Index (RSI) indicator keeps heading south despite standing at around 25, while the Momentum indicator heads south almost vertically, all of which reflects the strength of selling interest.

In the four-hour chart, XAU/USD is also bearish, as price holds below the 20-, 100-, and 200-period SMAs, which have turned into a layered cap above the market. The RSI indicator near 20 signals oversold conditions, but the deeply negative Momentum reading reinforces persistent downside pressure, suggesting that any rebounds are likely to face selling interest while these averages remain overhead.

On the topside, initial resistance emerges at the 20-period SMA around $4,271.84, with the 100-period SMA near $4,452.54 and the 200-period SMA close to $4,541.94 forming successive barriers that would need to be reclaimed to ease the current downward pressure. Below $4,098, on the other hand, the XAU/USD pair is poised to test buyers at the next psychological threshold, $4,000.

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