XAU/USD Price forecast: Gold trims gains, dips to $4,050

XAU/USD Current price: $ 4,050

• Escalating Middle East tensions spurred risk aversion and boosted the US Dollar.
• United States President Donald Trump threatened a massive attack on Iran and its allies.
• XAU/USD turned bearish in the near term and could soon challenge $4,000.

After hitting a weekly peak of $4,165 on Wednesday, Gold turned south and currently changes hands at around $4,050 a troy ounce. The US Dollar (USD) resumed rallying on the back of inflation fears linked to the escalation of the Middle East conflict.

The Houthis, an Islamic political and military faction that controls part of Yemen, declared a maritime embargo against Saudi Arabia in retaliation for airstrikes at the Sanaa airport, and shot Saudi vessels. In return, United States (US) President Donald Trump threatened “major military punishment,” pushing the odds for a conflict resolution. Later in the day, President Trump announced he was considering a massive attack “greater than anything before,” further fueling USD demand.

Meanwhile, the US reported that Initial Jobless Claims declined in the week ending July 18 to 187K from the 209K from the previous one, also easing from the previous 212K. Also, the European Central Bank (ECB) announced its decision on monetary policy. The central bank left rates unchanged, as widely anticipated, while policymakers noted that uncertainty remains high “and the full inflationary impact of the energy shock has yet to play out.” Officials also reiterated that they are well-positioned to navigate the uncertainty caused by the Middle East conflict.

Friday will bring the preliminary estimates of the July S&P Global Purchasing Managers’ Indexes (PMIs) for most major economies. The business activity indicators are likely to trigger some near-term noise, while softer-than-anticipated expansion is likely to feed the dismal mood and hence push the Greenback even higher.

XAU/USD short-term technical outlook

Technically, the four-hour chart shows that XAU/USD has turned bearish in the near term as it sits beneath the main moving averages. The 100-period Simple Moving Average (SMA) at $4,079.33, the 20-period SMA at $4,081.89 and the 200-period SMA at $4,117.30 all align overhead as a layered supply band that caps recovery attempts. The Relative Strength Index (RSI) indicator hovers at 44, while the Momentum indicator turned flat around its midline, reflecting fading downside conviction after the sharp intraday retracement.

In the daily chart, XAU/USD maintains a bearish tone as spot price remains under the key moving averages. Gold is below the 20-day SMA at $4,070.44, while the 100-day SMA at $4,490.36 and the 200-day SMA at $4,495.63 stay well above price, suggesting the broader trend remains capped. Momentum is soft, with the 14-period Momentum indicator in negative territory and the RSI indicator hovering near 45, hinting at lingering downside pressure rather than a decisive recovery.

On the topside, immediate resistance is located at the 100-period SMA at $4,079.33, followed closely by the 20-period SMA at $4,081.89, forming a tight cluster that bulls would need to clear to ease short-term pressure. A more significant barrier emerges at the 200-period SMA at $4,117.30, followed by the weekly top at $ 4,165. Support, on the other hand, lays at $4,000, followed by the June monthly low at $3,941.

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