Gold Price Forecast: XAU/USD lacks a clear directional impetus, with eyes on geopolitics
- Gold struggles around $4,350 early Tuesday as sellers keep lurking at higher levels.
- US Dollar consolidates previous gains amid Oil price rebound and Treasury yields retreat
- Gold’s daily technical setup paints a mixed picture, with a neutral daily RSI.
Gold has met supply at higher levels early Tuesday, stalling its rebound and struggling around $4,350 as all eyes remain on geopolitics and speeches from US Federal Reserve (Fed) officials.
Gold looks to fresh trading impetus
Gold staged a decent recovery in the early Asian hours this Tuesday, but failed to sustain before reversing its gains.
A sharp pullback in US Treasury bond yields helped the early rebound in Gold, but reviving buying interest in Oil prices and inflation fears weigh on the bright metal’s uptick.
Oil prices are rising for the first time in five trading days as Iran-backed Yemeni Houthi-led geopolitical escalation in the Middle East counters diplomatic efforts and the resumption of oil flows through the Strait of Hormuz.
According to CNBC News, President Masoud Pezeshkian will lead an Iranian delegation at the United Nations (UN) General Assembly in New York on Tuesday, rekindling hopes for diplomacy.
Additionally, hawkish Fed bets remain in play, tempering any upside attempts in the non-yielding bullion so far this week, despite the renewed weakness in the US Dollar (USD).
Markets also remain nervous ahead of the much-awaited Trump-Xi meeting, scheduled for Thursday, refraining from creating fresh positions in the bright metal.
Therefore, Gold will likely maintain its range play unless the Middle East conflict intensifies again and fuels a fresh Oil rally.
Gold support holds as CTA selling seen as fresh buying opportunity
According to TD Securities, “CTAs have unwound recent buying in gold, but the market remains well-supported by underlying discretionary investment appetite.” The bank argues that, even with “a hiking cycle being priced in,” the “broader precious metals landscape remains extremely favorable,” noting that “an easing of energy prices has also offered support in the immediate term.” Against this backdrop, TD Securities expects that “any near-term weakness in the precious metals market would be contained to only modest CTA selling, and would increasingly be seen as a buying opportunity for the yellow metal.”
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades around $4,343, holding just above the medium-term moving averages but capped beneath the short-term dynamic resistance. The 50-day simple moving average (SMA) at $4,301 and the 100-day SMA at $4,317 sit below price and suggest underlying trend support, while the 21-day SMA at $4,403 acts as immediate overhead resistance after the latest pullback. The ongoing test of the rising support trend line around $4,343 keeps the broader uptrend technically intact, and a neutral near-term bias is reinforced by the Relative Strength Index (RSI) hovering close to the 50 line at 48.5.
On the topside, initial resistance emerges at the 21-day SMA near $4,403, with a more significant barrier at the 200-day SMA around $4,542, where any sustained break would reopen the path toward recent highs. On the downside, the rising trend-line support clustered around $4,343 is the first level to watch; a daily close below it would expose the 100-day SMA at $4,317, followed by the 50-day SMA near $4,301 as deeper support where buyers could attempt to reassert the broader bullish structure.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
