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Gold Price Forecast: XAU/USD recovery falters amid Mideast escalation risks, Bear Cross

  • Gold stays defensive around $4,500 early Thursday after facing rejection at $4,600 a day ago.
  • The US Dollar preserves recent strength as Middle East escalation risks loom on fading hopes of ceasefire.   
  • Gold appears vulnerable as the daily RSI remains below 50 and with a Bear Cross in play.

Gold snaps a two-day recovery and turns defensive at around $4,500 early Thursday, having failed to sustain above the $4,600 mark.

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Gold struggles as Middle East war looks to extend

Clearly, the uncertainty and confusion over negotiations on a potential ceasefire and the chances of further escalation in the Middle East war seem to revive risk-off flows into the financial markets, supporting the safe-haven demand for the US Dollar (USD) at the expense of Gold.

US President Donald Trump continues to insist that peace talks are underway with Iran, while the latter continues to deny any such negotiations.

Iran’s Foreign Minister Abbas Araghchi, on the US’ 15-point plan, said that the proposals had been “passed on to the country’s senior authorities” but Iran had “no intention of negotiating for now”.

Instead, Iran put forward its five-point plan, which included an end to the fighting and the assassination of its officials, guarantees that no other war is started against it, reparations for the current conflict, and Iranian control over the Strait of Hormuz, per The Guardian.

However, markets view these likely peace talks as a pretext by President Trump to buy time to prepare for a full-blown ground operation in the Iranian island of Kharg over the weekend.

The US has been mobilizing additional troops to the Middle East lately. Kharg Island is Iran’s main oil export terminal, handling about 90% of the shipments.

These looming risks remain supportive of the Greenback, the so-called world’s reserve currency, checking any recovery attempts in the USD-denominated Gold.

In the upcoming sessions, Gold traders will continue to remain at the mercy of the Mideast developments and end-of-the-quarter readjustments, which could significantly impact the bright metal’s price movements.

Meanwhile, the technical setup on the daily chart suggests that the downside risks remain intact for Gold in the near-term as the price faced rejection at the $4,600 level.

Gold price technical analysis: Daily chart

Chart Analysis XAU/USD

The near-term bias is mildly bearish as spot slips below the 21-day Simple Moving Average (SMA) near $4,940 and the 50-day SMA around $4,965, shifting the short-term structure in favor of sellers while price still holds above the rising 100- and 200-day SMAs clustered in the $4,620–$4,110 band. This configuration signals an ongoing correction within a broader uptrend rather than a full trend reversal.

The Relative Strength Index (RSI) at 33 stays below the 50 line and close to oversold territory, reinforcing downside pressure. Additionally, the 21-day SMA closed below the 50-day SMA on Wednesday, confirming a Bear Cross and reinforcing the bearish interests.

Initial resistance aligns with the 21-day SMA around $4,940, with the 50-day SMA near $4,965 as the next upside hurdle that would need to give way to ease the immediate bearish tone. A sustained break above that zone would open the way toward $5,100, where recent swing highs reinforce a more significant cap. On the downside, immediate support sits near $4,450, ahead of the rising 100-day SMA around $4,625, which marks the first key level that protects the broader bullish structure. A clear drop through the 100-day SMA would expose the $4,300 area, where proximity to the 200-day SMA around $4,115 would be expected to attract dip-buying interest.

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

Author

Dhwani Mehta

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.

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