$4,465: Gold looks to regain 21-day SMA amid sustained USD weakness
- Gold stages a decent rebound toward $4,450 in Asia on Tuesday.
- US Dollar hits two-week lows as USD/JPY sell-off counters hawkish Fed bets, Iran risks.
- Acceptance above 21-day SMA at $4,465 is critical for Gold bulls amid bullish RSI.
Gold has snapped a two-day losing streak early Tuesday, staging a decent comeback toward $4,450 after finding strong buyers below the $4,400 level.
Gold looks north as Japanese Yen keeps surging
Gold is looking to resume its recovery from four-week lows of $4,283 hit last week, capitalizing on sustained US Dollar weakness across the board.
The US Dollar sits at two-week lows against its six major peers, as the ongoing USD/JPY sell-off counters hawkish bets around the US Federal Reserve’s (Fed) interest rate outlook and Iran’s retaliation warnings.
The Japanese Yen (JPY) extends its rally to seven-month highs versus the Greenback after Japan’s wage growth data and second-quarter Gross Domestic Product (GDP) revision bolstered expectations for a faster pace of the Bank of Japan’s (BoJ) tightening.
This aggressively hawkish BoJ repricing continues to weigh on the USD/JPY pair and the USD, acting as a tailwind for the bright metal.
However, it remains to be seen if Gold sustains its recovery momentum, as Oil prices remain elevated at seven-week highs, keeping inflation concerns and Fed rate hike bets alive.
The black gold stays underpinned by fresh Iranian threats in the Persian Gulf.
Iranian Parliament Speaker Mohammad Baqer Qalibaf warned after the US and Iran traded strikes on shipping over the weekend, "strike our assets, and you get struck."
On Tuesday, Secretary of Iran's Supreme National Security Council, Mohsen Rezaei, reissued dual economic and military threats on X.
Later in the day, Gold could experience volatility as US traders return after the extended weekend and react to the geopolitical headlines, while repositioning ahead of Friday’s US Consumer Price Index (CPI) data release, which could seal in a rate hike next week.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,425.55, holding a mild bullish bias as it sits above the 50-day and 100-day simple moving averages (SMAs) at roughly $4,255.70 and $4,347.13, respectively, while remaining capped by the 21-day SMA near $4,465.07. The Relative Strength Index (14) around 52 suggests modest positive momentum, hinting that buyers retain the upper hand so long as price holds over the underlying moving-average support band.
On the topside, immediate resistance emerges at the 21-day SMA around $4,465.07, with the longer-term 200-day SMA higher up near $4,536.87 acting as a subsequent barrier if bulls extend the advance. On the downside, initial support is seen at the 100-day SMA near $4,347.13, ahead of the deeper 50-day SMA support zone around $4,255.70, where a break would undermine the current constructive tone and expose a more pronounced corrective phase.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold rally shifts from shock-driven spike to structural conviction
Analysts at Societe Generale argue that Gold has now "entered a new phase of its 2026 bull run," characterised less by short-term speculative flows and more by "broad-based, structural conviction across every category of market participant." What initially "began as a geopolitical shock" has, in their view, "evolved over the following months into something far more durable": a "synchronised build-up of physical, futures, and options exposure" that "now spans retail investors, professional money managers, and derivatives traders alike." This alignment across physical holdings, futures positioning and options strategies underpins their assessment that the current Gold uptrend is being driven by multiple, mutually reinforcing demand channels rather than transient momentum alone.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
