Gold Price Forecast: XAU/USD lacks clear direction amid Mideast uncertainty, ahead of US inflation
- Gold takes a breather early Thursday, following wild swings witnessed on Wednesday amid the Mideast drama.
- The revival of haven demand lifts the US Dollar on doubts over the US-Iran ceasefire, despite dovish Fed Minutes.
- Gold battles the 21-day SMA at $4,711 as the RSI tests the midline once again.
Gold appears at a critical juncture in Asia on Thursday, battling the $4,700 mark as traders await a clear directional impetus amid scepticism over the US-Iran ceasefire agreement and the Strait of Hormuz impasse.
Gold: Focus shifts to US macro data
Risk sentiment has turned sour early Thursday, reviving the safe-haven appeal of the US Dollar (USD) while keeping Gold buyers on the defensive. The Greenback holds its recovery following the previous day’s slump on the Middle East truce.
However, clouds over the Mideast ceasefire counter the dovish Minutes of the US Federal Reserve’s (Fed) March monetary policy meeting, supporting the buck.
Markets remain in serious doubts over the US-Iran ceasefire as Israel continues its attacks on Iran-aligned militant group, Hezbollah, in Lebanon.
Iranian Foreign Minister Abbas Araghchi noted that the announcement that says the ceasefire included Lebanon.
On the contrary, US Vice President JD Vance noted that the US never promised that, voicing messages from US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu citing that the truce did not include Lebanon.
In response to the continued Israeli assaults on Beirut, Iran halted the passage of oil tankers via the Strait of Hormuz, which was earlier reopened for the two-week ceasefire period.
Reuters reported Hezbollah saying that it fired rockets at northern Israel in response to “ceasefire violations”.
The fragility of the US-Iran ceasefire, combined with the Strait of Hormuz reopening uncertainty haved revived fresh concerns surrounding the Mideast conflict, cushioning the recent downside in Oil price and rekindling the bearish undertone in Gold.
However, Wednesday’s dovish Fed Minutes could offer some temporary relief to the non-yielding bullion, as the focus turns toward the US fundamentals once again.
'Many participants judged that, in time, it would likely become appropriate to lower the target range for the federal funds rate if inflation were to decline in line with their expectations,' the Fed said.
Meanwhile, the final estimate of the fourth-quarter US Gross Domestic Product (GDP) will be reported on Thursday, alongside the Core Personal Consumption Expenditures (PCE) - Price Index and the weekly Jobless Claims data.
But the US PCE inflation is likely to be ignored by markets as the reading is for February, lacking the impact of the Mideast war.
That being said, the main event risk for Gold will be on Friday, the March US Consumer Price Index (CPI) data and is expected to show how the Iran war has hit President Trump at home, significantly impacting the USD and Gold price.
In the meantime, the geopolitical headlines will continue to drive risk sentiment and Gold trades.
Gold price technical analysis: Daily chart
The metal is consolidating in a neutral to slightly bearish stance, holding above the 21-day and 100-day simple moving averages (SMAs) at roughly $4,710 and $4,674 while remaining capped by the 50-day SMA near $4,914. This configuration hints at a market that is pulling back within a broader uptrend but lacking strong directional conviction, a view reinforced by the Relative Strength Index (14) hovering just below the 50 line, signalling modest, non-trending momentum.
On the topside, initial resistance is located at the 50-day SMA around $4,913; a daily close above this barrier would be needed to revive bullish traction toward recent highs. On the downside, immediate support is seen at the nearby 21-day SMA around $4,710, followed by the 100-day SMA near $4,674, while the 200-day SMA down at approximately $4,172 marks a deeper medium-term floor if selling pressure accelerates.
(The technical analysis of this story was written with the help of an AI tool.)
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.
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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.
