XAU/USD Price forecast: Gold extends rally as Middle East concerns intensify

Valeria Bednarik FXStreet

XAU/USD Current price: $ 4,144

US President Donald Trump threatened to intensify attacks on Iran.
The United Kingdom released the June Consumer Price Index.
XAU/USD is bullish in the near-term, next hurdle at $4,200.

The XAU/USD pair extended its weekly rally towards the $4,160 region on Wednesday, holding nearby in the American afternoon. The Greenback found modest demand throughout the first half of the day, but gave up following comments from United States (US) President Donald Trump, threatening to destroy Iran’s power plants and bridges.

“Any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by Missile, Rocket, Drone, or any other device or weapon, the United States will bomb and destroy ONE BRIDGE OR POWER PLANT, including those located next to, or in, the Capital City of Tehran,” President Trump shared on Truth Social. The news triggered safe-haven demand, yet again, demand for the precious metal outpaced that for the US Dollar (USD).

Meanwhile, it was the turn of the United Kingdom (UK) to update inflation data. According to the Office for National Statistics (ONS), the Consumer Price Index (CPI) rose 2.6% in the year to June, easing from the 2.8% posted in May. Core annual inflation rose 2.6%, matching the previous reading and slightly higher than the 2.5% anticipated by market players, not enough to fuel rate hike speculation.

Most major economies reported the latest CPI figures in the last few days, and only US and UK inflation receded in June. Canadian and New Zealand figures were above expectations, although not far above previous readings. The numbers are a clear example of how energy-related inflation and, hence, the Middle East war are impacting financial markets these days, and therefore, shaping sentiment and trends.

Easing US inflationary pressures have put a halt to the US Dollar (USD) rally against Gold amid decreasing odds for rate hikes, even in a risk-averse environment.

XAU/USD short-term technical outlook

In the four-hour chart, XAU/USD turned bullish, as the price stands above the 20-period Simple Moving Average (SMA) at $4,060.38, the 100-period SMA at $4,074.44, and the 200-period SMA at $4,124.41, turning this trio into a dense support band beneath the market. Momentum remains constructive, with the Relative Strength Index (RSI) indicator at 66 and the 14-period Momentum indicator holding above its midline, despite losing upward strength.

In the daily chart, XAU/USD turned neutral. The pair holds well below the 200-day SMA at $4,496.16 and the 100-day SMA at $4,501.34, keeping the longer-term trend capped despite the recent bounce. At the same time, XAU/USD reclaimed the 20-day SMA (now at $4,069.95), suggesting some near-term stabilization. Finally, the RSI indicator aims higher at 51, while the Momentum indicator heads nowhere around their midlines.

On the downside, immediate support is located at around $4,100, followed by a congestion of moving averages in the $4,070 region. Deeper pullbacks should deny the bullish case and see the pair battle to retain the $4,000 mark. Resistance, on the other hand, lies at the intraday high at $4,165, followed by the $4,200 threshold.

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

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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