Gold Price Forecast: XAU/USD seems vulnerable amid bets for more hawkish central banks

Gold (XAU/USD) meets with a fresh supply on Friday and slides back below the $4,600 mark during the early European session, eroding a part of the previous day's modest recovery gains. Major central banks, including the US Federal Reserve (Fed), have turned hawkish amid concerns that energy shocks stemming from geopolitical tensions in the Middle East would rekindle inflationary pressures. This turns out to be a key factor undermining demand for the non-yielding yellow metal.

The Bank of Japan's (BoJ) 6-3 vote split earlier this week indicated increases willingness to hike interest rates as soon as June amid rising inflation risks. Moreover, the European Central Bank (ECB) also adopted a notably hawkish stance on Thursday and signaled a potential rate hike in June 2026 to combat sticky inflation. Furthermore, the Bank of England (BoE) presented a scenario that suggests rate hikes could be appropriate if inflation remains persistent. Adding to this, the US Fed's decision saw the highest number of dissents since 1992, with three policymakers voting against the accommodative tone in the statement.

Meanwhile, US President Donald Trump rejected an Iranian proposal to open the Strait of Hormuz and lift the blockade, while postponing nuclear issues to a later stage. Trump further said that he's going to keep Iran under a naval blockade until it agrees to a deal that addresses US concerns about the regime's nuclear program. Moreover, reports suggest that Trump was considering military strikes to break the negotiation deadlock, with Iran threatening to retaliate on US positions in case of renewed attacks. The situation reflects failing diplomatic efforts to end the war and raises skepticism over a near-term resolution to the conflict.

Furthermore, energy supplies through the critical Strait of Hormuz remain blocked. This remains supportive of elevated Crude Oil prices, which might continue to fuel inflationary concerns and hawkish central bank expectations. The US Dollar (USD), however, struggles to lure buyers in the wake of intervention fears-inspired rally in the Japanese Yen (JPY). A weaker buck, in turn, could help limit losses for the Gold. Traders now look forward to the US ISM Manufacturing PMI for some impetus. The fundamental backdrop, however, suggests that the path of least resistance for the XAU/USD pair is to the downside.

XAU/USD 1-hour chart

Technical Analysis:

The overnight failure to find acceptance above the 100-hour Exponential Moving Average (EMA) and the subsequent pullback from the 38.2% Fibonacci retracement level of the March-April upswing favour bearish traders. Moreover, the Relative Strength Index (RSI) at 40.04 sits below the neutral 50 mark, hinting at persistent downside pressure. Adding to this, the Moving Average Convergence Divergence (MACD) shows a negative reading of -6.47, reinforcing weakening momentum.

In the meantime, the next notable support emerges around $4,504.55, where buyers could attempt to slow the decline if selling pressure extends. On the topside, initial resistance is located at the 23.6% Fibo. retracement at $4,594.80, with the 100-period EMA at $4,621.99 and the 38.2% retracement at $4,650.63 forming subsequent barriers if a corrective bounce develops. Further up, additional resistance aligns at the 50.0% retracement at $4,695.75, followed by $4,740.87 and $4,805.12, before the cycle high at $4,886.95.

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