Gold Price Forecast: XAU/USD dives on renewed US Dollar strength

XAU/USD Current price: $4,673

• Hotter-than-anticipated United States inflation put markets on alert.
• Kevin Warsh was confirmed by the US Senate as Federal Reserve Governor.
• XAU/USD is having a hard time extending its rally, capped by 100-day SMA.

Spot Gold shed over $100 from an intraday peak of $4,773.60, and trades around $4,670 a troy ounce during American hours. The US Dollar (USD) gathered momentum late in the European session following the release of the United States (US) hotter-than-expected inflation figures.

The April Consumer Price Index (CPI) rose 3.8% in April, surpassing expectations of 3.7% and the 3.3% posted in March. Core annual inflation hit 2.8%, above the previous 2.6%. On a monthly basis, the CPI rose 0.6%, following March's increase of 0.9%.

Headline inflation, while not the Federal Reserve (Fed)’s preferred gauge, almost doubled the central bank’s goal of 2%, triggering speculation the Fed will have to go for rate hikes in the upcoming months.

Higher price pressures emanate from soaring energy prices caused by supply disruptions in the Middle East. In that front, there’s not much new. Tensions continue while a deal between the United States (US) and Iran seems more unlikely as time goes by. The Strait of Hormuz remains blocked, and US President Trump goes from threatening with massive attacks to claiming victory.

Mounting speculation of higher interest rates, coupled with risk aversion, is pushing the USD higher against most major rivals.

Meanwhile, the US Senate confirmed Kevin Warsh to be Fed Governor, in a 51-45 vote. The next vote to confirm Warsh as Chair will take place on Wednesday.

XAU/USD short-term technical outlook

The near-term picture shows XAU/USD holds above its 100-period and 200-period Simple Moving Averages (SMAs) In the 4-hour chart, at $4,668.58 and $4,683.55, while now below the 20-period SMA at $4,708.81. Moving averages are flat, reflecting the absence of directional strength. At the same time, the Relative Strength Index (RSI) indicator slips toward the mid-40s while the Momentum indicator aims south below its midline, reflecting sellers' dominance in the near term.

In the daily chart, XAU/USD holds well above the rising 200-day simple moving average (SMA) near $4,327.88, but it remains capped under the 20-day SMA at about $4,686.66 while sellers rejected advances around the 100-day SMA at roughly $4,785.41, for a third consecutive day. Meanwhile, technical indicators turned modestly lower but remain within neutral levels, not enough to confirm another leg lower.

A clear advance beyond the 100-day SMA could open the door for additional gains towards the $4,800 mark. On the downside, the immediate pivot sits in the current price area around $4,670, followed by the recent lows around $4,560. A more meaningful medium-term support is seen much lower at the 200-day SMA near $4,327.88, where a break would significantly weaken the broader uptrend structure.

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