Gold (XAU/USD) advanced sharply during the North American session on Thursday, climbing more than 1.30% and reclaiming the key $4,100 level. The precious metal is currently trading around $4,132, bouncing strongly from weekly lows near $4,021 hit on Wednesday.
The rebound in gold comes as the US Dollar weakened, largely driven by a pullback in oil prices following a brief spike amid escalating US-Iran tensions in the Middle East.
Middle East Tensions Ease, Pressuring the Dollar Geopolitical concerns dominated headlines earlier this week after the US and Iran exchanged attacks, raising fears of disrupted negotiations previously scheduled in Pakistan. This briefly pushed oil prices higher, with West Texas Intermediate (WTI) reclaiming the $75-per-barrel mark. However, oil retreated on Thursday as tensions appeared to ease, reducing safe-haven demand for the Dollar and supporting gold prices.
Higher energy prices had fueled speculation that the Federal Reserve might need to raise interest rates more aggressively to combat inflation, which stood near 4.2% in May. Markets are now closely watching next week’s key inflation data releases — including the Consumer Price Index (CPI) and Producer Price Index (PPI) — along with Fed Chair Kevin Warsh’s upcoming appearance before Congress.
Fed Outlook: Rate Hike Odds in September The Fed’s latest meeting minutes revealed a slightly hawkish tone, with many officials open to a rate hike, though the bank ultimately held rates steady. Money markets are currently pricing in a 62% probability of a 25-basis-point rate increase at the September meeting, according to Prime Terminal data.
New York Fed President John Williams reinforced this stance, stating that inflation remains “far too high” and emphasizing the need to factor in energy prices when formulating policy. He reiterated the central bank’s commitment to returning inflation to the 2% target, guided strictly by incoming data.
Falling Yields Add Tailwind for Gold Bullion buyers are also benefiting from declining US Treasury yields. The 10-year T-note yield fell five basis points to 4.529%, weighing on the US Dollar. The Dollar Index (DXY) dropped 0.21% and is currently hovering near 100.85, close to its weekly lows.
HSBC Cuts Gold Price Forecasts In a note released Thursday, HSBC revised its average gold price forecasts downward. The bank now expects gold to average $4,560 in 2026 (previously $4,864) and $4,925 in 2027 (previously $5,000).
Technical Outlook: Gold Eyes $4,300 Despite the rebound, gold remains in a broader bearish bias. It reached a two-day high near $4,138 but faces significant resistance. For bulls to confirm a trend reversal, prices need to break above the downsloping resistance trendline around $4,190–$4,215.
- Immediate resistance: $4,200, followed by $4,300
- Key moving averages: 200-day SMA at $4,362 and 50-day SMA at $4,492
- Support levels: $4,021 (July 8 low), $3,941 (June 30 low), and $3,886 (October 2025 low)
The Relative Strength Index (RSI) is approaching the neutral 50 level, suggesting momentum is shifting in favor of buyers in the short term.
Why Investors Turn to Gold Gold has served as a store of value and medium of exchange for thousands of years. Beyond its use in jewelry, it is widely regarded as a safe-haven asset during periods of geopolitical uncertainty, economic turbulence, and currency depreciation. As a non-yielding asset that doesn’t rely on any government or issuer, gold remains one of the most effective hedges against inflation and monetary instability.
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