Gold Price Forecast: XAU/USD sellers to retain control whilst below 21-day SMA

Gold turns south below $4,050 early Thursday as continued US-Iran hostilities stoke up Oil-driven inflation fears.
The US Dollar recovers from recent declines, fuelled by US inflation data-led reduced Fed hike bets.
Gold remains a ‘sell-on-rise’ trade as the daily chart points to more downside risks.

Dhwani Mehta FXStreet

Gold is replicating the depreciation seen in Wednesday’s Asian trades, turning negative once again, while heading toward the $4,000 threshold early Thursday.

Gold looks to more US economic data

Nothing changes geopolitically for Gold, as markets see a new wave of strikes being exchanged between the United States (US) and Iran after the US reimposed a naval blockade of its ports in the Strait of Hormuz.

Amidst latest headlines, the US Central Command (CENTCOM) said that it launched another wave of strikes against Iran in a further effort to keep the Strait of Hormuz open.

In response, the Iranian state media reported early Thursday that Tehran activated air defence in Tehran to counter 'hostile threats.'

Iran has been hitting back amid consecutive days of US strikes by targeting American military sites in neighbouring countries in what it has called an “existential war” with the US, per The Guardian.

The Middle East hostilities keep Oil prices elevated at monthly highs, ramping up inflation fears and creating a perfect recipe for the US Federal Reserve (Fed) to deliver on its two interest rate hikes projected for this year.

This, in turn, seems to provide some support to the US Dollar (USD), at the time of writing, helping the Greenback to recover from monthly lows against its major peers, while reinforcing the bearish pressure on the non-yielding Gold.

Additionally, the sell-off in Asian stocks, triggered by the chip makers, boosts the haven demand for the USD at the expense of the bullion.

However, it remains to be seen if Gold extends the downside or rebounds on any news hinting at prospects of de-escalation between the US and Iran.

Earlier this week, every dip in Gold was quickly bought, thanks to soft US inflation figures for June, which prompted markets to scale back bets for an imminent Fed rate hike.

On Tuesday, US core Consumer Price Index (CPI) inflation, which excludes food and energy, arrived flat on the month, putting the 12-month rate at 2.6%, which undershot expectations of 0.2% and 2.9%, respectively.

Meanwhile, data showed on Wednesday that the Producer Price Index (PPI) dropped 0.3% last month after a downwardly revised 0.6% increase in May.

The odds for a hike in July were slashed to 11%, versus a 45% implied probability at the start of the week. However, markets still price in even odds of at least a 25-basis-point hike in September, according to the CME Group’s FedWatch Tool.

Later today, a bunch of high-impact US data releases, including Retail Sales and Jobless Claims, could further offer fresh signals on the Fed’s rate hike outlook, injecting volatility around the Gold price.

Gold price technical analysis: Daily chart

In the daily chart, XAU/USD trades at $4,036.20, extending a bearish near-term tone as spot remains decisively below all major moving averages. The 21-day simple moving average (SMA) at $4,089.39 is the nearest cap, with the 50-day SMA at $4,306.83 and the longer-term 200-day and 100-day SMAs at $4,495.95 and $4,548.35 reinforcing a heavy overhead structure. The Relative Strength Index (14) around 41 suggests subdued momentum, hinting at a weak bounce potential rather than a robust reversal.

On the downside, the immediate focus sits around the current area near $4,036, which acts as a short-term pivot after the latest slide from higher levels. On the topside, a recovery would first need to clear the 21-day SMA at $4,089.39 before exposing the $4,306.83 region marked by the 50-day SMA; only a sustained move above these hurdles would start easing the broader bearish pressure, while the $4,495.95–$4,548.35 band defined by the 200-day and 100-day SMAs remains a distant resistance zone.

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

Economic Indicator

Retail Sales (YoY)

The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Retail Sales measure the change in the total value of goods sold at the retail level during a year. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. A result higher than expected is typically viewed as positive or bullish for the USD, whereas a lower than expected result is considered negative or bearish for the USD.

Why it matters to traders?

Retail Sales data published by the US Census Bureau is a leading indicator that gives important information about consumer spending, which has a significant impact on the GDP. Although strong sales figures are likely to boost the USD, external factors, such as weather conditions, could distort the data and paint a misleading picture. In addition to the headline data, changes in the Retail Sales Control Group could trigger a market reaction as it is used to prepare the estimates of Personal Consumption Expenditures for most goods.

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.

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