Gold nears daily low as USD strength counters Middle East tensions ahead of US PCE data

Gold attracts some dip-buyers on Friday, though it lacks follow-through amid a broadly firmer USD.
Inflation fears temper Fed rate cut bets and underpin the USD, acting as a headwind for the bullion.
Rising geopolitical risks in the Middle East could support the safe-haven commodity and limit losses.

Haresh Menghani FXStreet

Gold (XAU/USD) surrenders a major part of its modest intraday gains and drops to the lower end of its daily range during the first half of the European session on Friday. The US Dollar (USD) buying remains unabated amid the growing acceptance that the Iran war-inspired surge in energy prices would rekindle inflationary pressure and force the Federal Reserve (Fed) to delay cutting interest rates. This turns out to be a key factor acting as a headwind for the non-yielding yellow metal.

Meanwhile, geopolitical risks remain in play amid a further escalation of conflicts in the Middle East, which could help limit the downside for the safe-haven Gold. Iran’s new supreme leader, Mojtaba Khamenei, warned during his first public statement that all US military bases in the region should be immediately closed or will be attacked. Khamenei further added that attacks against US bases in the region would continue, even though Iran believes in goodwill with its neighbors.

Meanwhile, US President Donald Trump said that stopping the evil empire in Iran was of greater importance to him than Oil prices. In fact, Crude Oil prices have been climbing since the start of the US-Israel war on Iran. Adding to this, supply disruption fears due to the closure of the Strait of Hormuz have been fueling concerns about a surge in inflation, which has forced investors to rapidly scale back bets on interest rate cuts by the US Federal Reserve (Fed) in 2026. This remains supportive of elevated US Treasury bond yields, which favors the USD bulls and might continue to cap the Gold price ahead of the US Personal Consumption Expenditures (PCE) Price Index.

The crucial inflation data will play a key role in influencing market expectations about the Fed's policy outlook amid growing worries about a war-driven spike in consumer prices. This, in turn, would drive the USD demand and provide some meaningful impetus to the Gold price. The focus, however, remains on geopolitical developments. Nevertheless, the XAU/USD pair seems poised to register losses for the second straight week. Moreover, the aforementioned mixed fundamentals warrant caution before placing aggressive directional bets and positioning for any further appreciating move.

XAU/USD 4-hour chart

Gold seems vulnerable while below $5,200; 200-EMA on H4 holds the key

The commodity once again rebounds from the vicinity of the 200-period Exponential Moving Average (EMA) support on the 4-hour chart. This keeps the broader uptrend structure intact despite recent pullbacks and warrants caution for the XAU/USD bears.

Meanwhile, the Moving Average Convergence Divergence (MACD) line remains below its signal line and below the zero mark, yet the latest contraction in negative readings hints at fading bearish momentum rather than fresh downside extension. The Relative Strength Index (RSI) near 44 stays below the 50 midline but off oversold territory, consistent with a corrective phase within an underlying upward bias rather than a completed top.

Immediate support emerges around $5,090, where recent intraday lows align just above the 200-period EMA on the 4-hour chart near $5,039, forming a key demand band; a break below this zone would expose deeper support toward $5,000. On the upside, initial resistance appears at the recent swing high near $5,160, with a sustained break opening the way toward the $5,200 region and then the late-stage peak near $5,230.

A recovery through $5,160–$5,200 would likely pull the MACD back toward the zero line and push the RSI closer to 50, reinforcing the bullish tilt, while failure to defend the $5,090–$5,039 support cluster would shift the focus to a more neutral or even bearish 4-hour outlook.

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

Economic Indicator

Core Personal Consumption Expenditures - Price Index (YoY)

The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.

Why it matters to traders?

After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.

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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