Gold Price Forecast: XAU/USD dives to fresh two-month lows, aims to challenge $4,000

XAU/USD Current price: $4,242

• Renewed Middle East tensions and speculation about rate hikes fuel US Dollar demand.
• The United States will publish Consumer Price Index figures on Wednesday.
• XAU/USD extends its bearish route and aims to test the psychological $4,000 mark.

Financial markets keep revolving around Iran war headlines, and the US Dollar (USD) swings accordingly. The Greenback stayed on the back foot throughout the first half of the day amid developments in the Middle East. As a result, Gold peaked at $4,363 but was unable to hold modest intraday gains and quickly turned south, trading at fresh two-month lows in the $4,240 region.

The White House and Tehran continue discussing Iran’s right to develop nuclear weapons and the reopening of the Strait of Hormuz, while United States (US) President Donald Trump repeated for the umpteenth time that a deal could be reached in a matter of days.

The USD surged during American trading hours, and maintain its positive momentum while heading into Wednesday´s Asian open, as President Trump exacerbated tension by sharing on Truth Social: “I have just been informed by our Great Military that last night the Iranians shot down one of our highly sophisticated Apache Helicopters ... The United States must, of necessity, respond to this attack.”

USD strength could also be explained by mounting speculation that the Federal Reserve (Fed) will have to hike interest rates before year's end. The US will publish May Consumer Price Index (CPI) figures on Wednesday, and it’s expected to show inflation at its highest level in three years, driven by higher energy prices.

Finally, Wall Street's poor performance adds to safe-haven demand, further fueling USD demand.

XAU/USD short-term technical outlook

The near-term picture is bearish, as, in the four-hour chart, XAU/USD trades below the 20-period simple moving average (SMA) at $4,354.59, the 100-period SMA at $4,475.38, and the 200-period SMA at $4,558.20, with the shorter one attracting selling interest. The Momentum indicator turned north, but remains within negative levels, while the Relative Strength Index (RSI) indicator heads firmly lower near 30, without signs of downward exhaustion.

Bigger time frames also support the bearish case. In the daily chart, XAU/USD trades below all its moving averages, with the nearest one being the 200-day SMA at roughly $4,440. The 20-day SMA heads north above the longer one near $4,494. The clustering of these averages well above spot, together with the more distant 100-day SMA around $4,788, suggests the broader trend remains pressured while the 14-day Relative Strength Index near 30 signals downside pressure.

On the topside, initial resistance is seen at the 20-period SMA near $4,355, with further barriers at the 200-day SMA around $4,440 and the 100-period SMA around $4,475. The immediate support is the $4,200 threshold, while below the latter, the path is open towards the critical $4,000 mark.

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