Gold Price Forecast: XAU/USD nears $5,100 as Middle East war escalates

XAU/USD Current price: $5,120

• The closure of the Strait of Hormuz revived concerns about an oil shortage.
• The United States reported that the trade deficit shrank in January.
• XAU/USD is under selling pressure in the near term, but still within familiar levels.

Renewed US Dollar (USD) demand amid risk aversion pushed XAU/USD lower on Thursday, with the pair currently trading at around $5,120. Latest tensions revolve around the Strait of Hormuz, which remains closed, and there are reports indicating Iran planted mines through it. Additionally, Iraq temporarily interrupted its operations after a couple of its tankers were hit in the area.

Adding fuel to the fire, the new Iranian Supreme Leader, Mojtaba Khamenei, issued a statement in which he declared that the Strait should remain closed as a tool to pressure the enemy. Oil prices and the Greenback are firmly up on the day, while stock markets took a turn for the worse, as investors fear an energy shortage will boost inflationary pressures.

Data-wise, the United States (US) data came in better than expected. On the one hand, the January Goods and Services Trade Balance posted a deficit of $ 54.5 billion, improving from the previous $-72.9 billion. On the other hand, Initial Jobless Claims for the week ended March 7 printed at 213K, easing from the previous 214K and better than the 215K expected.

The US will publish the January Personal Consumption Expenditures (PCE) Price Index data on Friday. The figures are relevant ahead of the Federal Reserve (Fed) monetary policy decision next week, although the figures are from January, delayed due to the latest partial government shutdown.

XAU/USD short-term technical outlook

In the 4-hour chart, XAU/USD is bearish as the price retreats below the 20-period Simple Moving Average (SMA) and now the 100-period SMA, while quickly approaching a marginally bullish 200-period SMA. At the same time, the Relative Strength Index (RSI) indicator aims south at around 43, while the Momentum indicator has slipped back into negative territory, reinforcing the view that sellers are taking control of the bright metal.

Immediate resistance emerges around the 100-period SMA near $5,160, with a break above it exposing the 20-period SMA near $5,165. Additional recoveries reopen the path toward $5,200 and then the recent high around $5,230. Support, on the contrary, comes at the 200-period SMA around $5,085 and then the recent lows in the $5,075 area, en route to the $5,000 mark.

In the daily chart, XAU/USD retains a mildly bullish as price battles around a rising 20-day SMA near $5,120 and stays comfortably above the 100- and 200-day SMAs, which continue to trend higher and reinforce the broader uptrend. The RSI indicator aims lower just above the 50 line, while the Momentum indicator remains in positive territory, though easing, suggesting the latest leg higher is slowing rather than reversing at this stage.

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