Gold retreats after flirting with $4,700: buyers still hold the grip

XAU/USD Current Price: $4,641

• The US Dollar found some near-term demand but remains weak amid Middle East woes.
• Market participants await the United States PCE Price Index for additional clues.
• XAU/USD corrects lower, but technical readings favor another leg north.

The US Dollar (USD) sell-off appears to have found a temporary bottom on Tuesday, and market players are willing to book some profits. Gold is no exception, with the precious metal currently trading around $4,650 after flirting with the $4,700 mark at the beginning of the day.

Nevertheless, the broad USD weakness prevails amid persistent uncertainty related to the Middle East situation and ahead of fresh United States (US) inflation data.

Oil prices edged sharply lower despite the latest round of US sanctions on Iran, easing pressure on financial markets. US President Donald Trump announced through Truth Social that all mines have been removed and/or detonated from within the International Waters of the Strait of Hormuz, adding that “any ship or boat placing new mines will be immediately and systematically destroyed.”

Also, hopes that Washington and Tehran could return to the negotiating table helped keep the USD in check. According to Al-Arabiya, Asim Munir, Pakistan Chief of Defensive Forces, carried an offer to Iran to halt the siege and lift sanctions under the Memorandum of Understanding (MoU).

Data-wise, the US released the ADP Employment Change 4-week average report, which showed that companies added an average of 11.750K jobs per week over the four weeks ending August 8, better than the 9.5K reported the previous week.

Focus shifts to the US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve (Fed) favorite inflation gauge. Annual PCE Price Index stood at 3.7% in June, while the core annual figure printed at 3.3%, and is expected to remain the same. Any uptick in inflationary pressures will likely boost odds for a Fed hike, and therefore, support some USD intraday gains.

XAU/USD Technical Outlook:

XAU/USD is bullish, despite the latest retracement. The 4-hour chart shows that the metal consolidates above the 20-period Simple Moving Average (SMA) at $4,616.76, with the 100- and 200-period SMAs trailing well below at $4,385.67 and $4,220.21, respectively, reinforcing a well-established uptrend. The Relative Strength Index (RSI) indicator hovers near 64, i while the positive 14-period Momentum reading hints that buyers remain in control, albeit paused.

In the daily chart, XAU/USD extends its advance firmly above the 20-, 100- and 200-day SMAs, which cluster between roughly $4,338 and $4,520 and collectively underpin a bullish near-term bias. The RSI indicators stabilized above 70, while the Momentum indicator eased from its peak but remains well above its midline, suggesting the latest leg higher could still have room to run, but also leaving the price vulnerable to corrective pullbacks.

On the downside, initial support is aligned at the 20-period SMA around $4,616.76, with a deeper cushion at the 100-period SMA near $4,385.67 and the 200-period SMA around $4,220.21 if corrective pressure intensifies. As long as XAU/USD continues to trade above these moving averages, the broader bullish structure remains intact, with gains beyond $4,700 initially exposing the $4,730 price zone en route to $ 4,800.

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