Gold keeps the red below $4,750 amid firmer USD; US-Iran peace talks and US CPI in focus

Gold meets with a fresh supply amid a modest USD uptick, though it lacks bearish conviction.
Inflation fears fuel hawkish Fed expectations and exert additional pressure on the commodity.
Traders now seem hesitant to place aggressive bets and opt to wait for the key US CPI report.

Haresh Menghani FXStreet

Gold (XAU/USD) maintains its offered tone below the $4,750 level through the first half of the European session on Friday, albeit it lacks bearish conviction.

The commodity remains confined in a familiar range as traders keenly await the release of the latest US consumer inflation figures before positioning for a firm near-term direction.

The crucial US Consumer Price Index (CPI) report is expected to show that inflation likely rose further in March amid the war-driven surge in Crude Oil prices. This could further discourage the US Federal Reserve (Fed) from cutting interest rates for a while. In fact, Minutes from the March 17–18 FOMC meeting revealed on Wednesday that officials were in no rush to cut rates amid upside risks to inflation stemming from Middle East energy price shocks. Adding to this, tensions around the Strait of Hormuz offer some support to the US Dollar (USD), which, in turn, is seen exerting downward pressure on the Gold price.

Iran halted shipping traffic through the strategic waterway in response to brutal Israeli attacks on Lebanon. Meanwhile, US President Donald Trump accused Iran of doing a very poor job of handling oil through the Strait of Hormuz, and that it was not the agreement they had. Trump also warned of renewed strikes if the Iran deal fails, suggesting that escalation risks remain on the table. This acts as a tailwind for Crude Oil prices, fueling inflationary concerns and reaffirming hawkish Fed bets. This further undermines the non-yielding Gold, though the lack of follow-through selling warrants caution for bearish traders.

Meanwhile, Israeli Prime Minister Benjamin Netanyahu said that he has issued an instruction to start direct negotiations with Lebanon as soon as possible, addressing a key point of contention in the fragile US-Iran ceasefire. A US State Department official reportedly confirmed that talks between Lebanon and Israel will take place next week in Washington, DC. Moreover, crucial US-Iran talks are scheduled in phases between late Friday night and Saturday. This keeps alive hopes of the Iran ceasefire stabilizing, which, in turn, caps any meaningful appreciation for the USD and helps in limiting the downside for the Gold price.

XAU/USD 4-hour chart

Gold seems vulnerable amid a bearish technical setup

From a technical perspective, the XAU/USD pair is holding a neutral-to-slightly bearish tone as it remains capped well below the 200-period Simple Moving Average (SMA) on the 4-hour chart. The said resistance coincides with the 61.8% Fibonacci retracement level of the March downfall and should act as a key pivotal point.

Meanwhile, the Relative Strength Index (RSI) around 56 hints at modest underlying demand after the recent pullback. That said, the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory, suggesting waning upside momentum and reinforcing the 200-period SMA's strong barrier at $4,883.

This is followed closely by the 61.8% Fibo. retracement level at $4,908.40. A clear break above this cluster would open the way toward $5,131.50 and ultimately $5,415.69.

On the downside, immediate support is provided by the 50.0% retracement at $4,751.70, with a break there exposing the next Fibonacci floors at $4,595.00 and $4,401.11, ahead of more substantial structural support near $4,087.71.

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

Economic Indicator

Consumer Price Index ex Food & Energy (YoY)

Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.

Why it matters to traders?

The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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