Gold stays on track to snap four-week losing streak amid fading Fed hike bets, weak USD
- Gold attracts buyers for the third consecutive day as receding Fed hike bets undermine the USD.
- Geopolitical uncertainties could limit deeper USD losses and cap the upside for the commodity.
- The XAU/USD pair still remains on track to register modest gains for the first time in five weeks.
Gold (XAU/USD) retains its bullish bias for the third straight day and traders near a one-and-a-half-week high during the first half of the European session on Friday.
The precious metal seems poised to register gains for the first time in five weeks, with bulls still awaiting a move beyond the $4,200 mark before positioning for an extension of this week's recovery from the lowest level since November 2025.
Traders trimmed their bets for interest rate hikes by the US Federal Reserve (Fed) following the release of softer-than-expected US monthly employment details on Thursday, which, in turn, is seen as a key factor driving flow toward the non-yielding Gold. The closely-watched US Nonfarm Payrolls (NFP) report showed that the economy added only 57K new jobs in June, compared to the 110K consensus estimates. Moreover, the previous month's reading was revised down from 172K to 129K, while the Unemployment Rate edged lower to 4.2% in June.
Nevertheless, the crucial data pointed to softening labor conditions and comes on top of easing inflation fears in the face of the recent slump in Crude Oil prices, tempering expectations of higher-for-longer interest rates. In fact, traders shifted expectations from one to two Fed rate increases in 2026 to between zero and one hike. This, in turn, keeps the US Dollar (USD) depressed near a two-week low, touched on Thursday, which further contributes to the bid tone surrounding the Gold. However, the uncertainty over US-Iran talks could limit USD losses.
The New York Times reported that US officials feared Israel may be hatching a plan to kill Iran’s senior negotiators during indirect peace talks. US officials believed that any assassination attempt could derail negotiations and trigger renewed fighting, the report added. Furthermore, Iran’s military headquarters warned that any US interference in the Strait of Hormuz will be met with a “decisive and swift response.” This keeps the geopolitical risk premium in play, which could support the safe-haven buck and keep a lid on any further appreciation for the Gold price.
Moving ahead, trading volumes are expected to remain low on Friday as the US stock and bond markets will remain closed in observance of Independence Day. Nevertheless, the aforementioned fundamental backdrop seems tilted firmly in favor of the XAU/USD bulls and backs the case for a further near-term appreciating move. Hence, any corrective pullback could be bought into and is more likely to remain limited.
XAU/USD 4-hour chart
Gold's technical setup backs the case for further gains; move beyond $4,200 awaited
From a technical perspective, an intraday breakout through the 100-period Simple Moving Average (SMA) and the 23.6% Fibonacci retracement level of the April-June downfall validates the near-term constructive outlook for the Gold price. That said, the Relative Strength Index (RSI) hovers near 68 and approaches overbought territory. Meanwhile, the Moving Average Convergence Divergence (MACD) stays positive and rising. Momentum indicators together suggest firm, but a potentially stretched bullish momentum.
Hence, any subsequent move up could face initial resistance near the 38.2% Fibo. level near $4,301.41. This is followed by the 50% retracement around $4,411.75 and the 61.8% level close to $4,522.09. Higher up, the 78.6% retracement at about $4,679.19 and the cycle high at $4,879.30 form a distant cap. On the downside, immediate support is seen at the 23.6% retracement near $4,164.89, with the 100-period SMA around $4,142.90 reinforcing the underlying floor. A deeper pullback could expose the broader structural base toward the $3,944.21 anchor.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
