Gold Trims Losses

Gold Price Trims Weekly Losses as Bargain Hunting Offsets Middle East Inflation Fears

Gold prices posted modest gains on Friday as bargain hunters stepped in following the previous session's sharp selloff. However, the precious metal remained on course for its biggest weekly decline since early June, as escalating US-Iran tensions continued to fuel inflation concerns and support the US dollar.

At 15:12 WIB, spot gold (XAU/USD) rose 0.47% to $3,995.35 per ounce, while Gold Futures gained 0.18% to $3,999.22. Meanwhile, silver (XAG/USD) slipped 0.18% to $55.43 per ounce, and platinum (XPT/USD) dropped 2% to $1,589.57.

Gold Heads for Biggest Weekly Drop Since Early June

Despite Friday's recovery, gold remained down around 3% for the week, marking its steepest weekly decline since early June as investors continued to favor the US dollar and other interest-bearing assets.

The latest wave of selling followed another US strike on Iranian targets on Thursday, just one day after an attack severely damaged an oil tanker near one of Iran's major export terminals. The renewed hostilities have extended the Middle East conflict into its fifth month, keeping crude oil prices elevated and reviving concerns that higher energy costs could reignite global inflation.

Rising oil prices complicate the Federal Reserve's policy outlook by increasing the risk that inflation remains above the central bank's target. As a result, interest rates may stay higher for longer, supporting US Treasury yields and the greenback while reducing the appeal of non-yielding assets such as gold.

Although US Consumer Price Index (CPI) and Producer Price Index (PPI) data released this week indicated easing underlying inflation pressures, markets largely looked past the backward-looking figures amid growing concerns that surging energy prices could reverse the recent disinflation trend.

Federal Reserve Officials Maintain a Hawkish Tone

Federal Reserve policymakers continued to emphasize that inflation risks remain elevated despite recent signs of moderating price pressures.

Tony Sycamore, Senior Market Analyst at IG, said the lack of a meaningful rebound in gold following weaker-than-expected US CPI and PPI data earlier this week was "not a particularly encouraging sign" for the metal's near-term outlook.

According to Sycamore, Thursday's decline has placed renewed pressure on the view that gold established a base near its late-June low of $3,942.

He added that a decisive break below that support could expose the October 2025 low around $3,886, while a recovery above the descending trendline resistance near $4,140 would significantly improve the technical outlook.

"For now, gold remains in a vulnerable position, facing pressure from a stronger US dollar and continued risk-off market flows," Sycamore said.

Gold has traded around the key psychological level of $4,000 per ounce for several weeks as Federal Reserve officials, including Chair Kevin Warsh, Governor Christopher Waller, and New York Fed President John Williams, reiterated that inflation remains too high to justify monetary policy easing.

Fed officials continue to stress that inflation is still above the central bank's 2% target, signaling they require sustained evidence of cooling price pressures before considering any interest rate cuts. This cautious stance has kept investors focused on developments that could reignite inflation, particularly persistently high energy prices.

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Gold Price Falls

Gold Price Forecast: XAU/USD Remains Bearish as Iran Tensions Fuel Inflation Risks and Fed Rate Hike Bets

Gold prices remained under pressure as escalating geopolitical tensions between the United States and Iran boosted crude oil prices, reviving inflation concerns and strengthening expectations that the Federal Reserve may keep interest rates higher for longer. The renewed outlook for tighter monetary policy continues to support the US dollar and limits upside potential for the precious metal.

Gold Technical Analysis: XAU/USD Holds Bearish Bias Below 200-Day SMA

The XAU/USD pair continues to trade with a short-term bearish bias, remaining below the 200-day Simple Moving Average (SMA) and within a broader descending parallel channel.

Although momentum indicators suggest selling pressure has eased slightly, they do not yet signal a sustainable bullish reversal. The Moving Average Convergence Divergence (MACD) remains marginally positive at 9.43, while the Relative Strength Index (RSI) stands near 40.77, indicating temporary stabilization rather than a confirmed recovery.

A decisive break and sustained close below the key psychological level of $4,000 would expose the year-to-date low around $3,943–$3,942, recorded in June. Further downside could extend toward the channel's lower boundary near $3,675.71, a major structural support level. A clear breakdown below this area would reinforce the broader bearish trend.

On the upside, immediate resistance is located near the upper boundary of the descending channel at $4,093.63, where renewed selling interest is expected to emerge. A sustained move above this level would shift focus toward the 200-day SMA around $4,495.94, which represents the next major resistance zone.

Softer US Producer Inflation Weighs on the Dollar

The US Bureau of Labor Statistics (BLS) reported on Wednesday that the Producer Price Index (PPI) unexpectedly declined 0.3% in June, following a downwardly revised 0.6% increase in the previous month.

On an annual basis, producer inflation slowed to 5.5% from 6.0% in May. The report followed the sharpest monthly decline in the US Consumer Price Index (CPI) since April 2020, reinforcing signs that underlying inflationary pressures are easing.

Following the data, traders reduced expectations for an imminent Federal Reserve interest rate hike, pushing the US Dollar Index (DXY) to its lowest level since June 18 and providing temporary support for gold prices during Wednesday's trading session.

Iran Conflict Keeps Oil Prices Elevated and Revives Inflation Fears

Despite softer inflation data, energy-driven inflation risks remain elevated as crude oil prices continue to trade near one-month highs amid escalating tensions between the United States and Iran and ongoing concerns over potential supply disruptions through the Strait of Hormuz.

The United States launched another round of airstrikes against Iranian targets on Wednesday, hitting coastal defense systems and missile infrastructure. Iran responded with drone and missile attacks against US-linked military facilities across the region.

US President Donald Trump also warned that additional critical Iranian infrastructure could become military targets should the conflict continue to escalate.

Meanwhile, Iran's Islamic Revolutionary Guard Corps (IRGC) threatened to expand the conflict by targeting additional regional energy supply routes, raising concerns that Tehran could use its Houthi allies in Yemen to disrupt shipping through the Bab el-Mandeb Strait.

The heightened geopolitical risks continue to support crude oil prices, reviving inflation concerns and increasing market expectations that the Federal Reserve could deliver at least one 25-basis-point interest rate hike in 2026.

That outlook is likely to prevent aggressive US dollar selling and suggests that the path of least resistance for gold prices remains tilted to the downside in the near term.

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Gold Faces Pressure

 

Gold Price Edges Lower as Elevated Oil Prices Strengthen Fed Rate Hike Expectations Despite Weaker US Dollar

Gold prices attracted fresh selling on Wednesday after failing to gain acceptance above the key $4,100 psychological level in the previous session. However, the precious metal continued to hold above the $4,000 mark during the Asian session as investors balanced weaker U.S. inflation data against renewed inflation concerns fueled by soaring energy prices.

Escalating tensions between the United States and Iran, coupled with the continued closure of the Strait of Hormuz, have kept crude oil prices elevated, reinforcing fears that energy-driven inflation could complicate the Federal Reserve's monetary policy outlook.

Gold Technical Analysis: Downtrend Remains Intact

The XAU/USD pair continues to trade within a descending parallel channel and remains well below its 200-day Simple Moving Average (SMA), suggesting that the broader bearish trend remains intact despite the recent rebound.

Momentum indicators, however, point to a modest improvement in buying interest. The Moving Average Convergence Divergence (MACD) has turned positive and continues to rise, signaling improving bullish momentum. Meanwhile, the Relative Strength Index (RSI) is hovering near the neutral 40.80 level, indicating that buyers have yet to gain full control.

On the upside, the upper boundary of the descending channel around $4,140.69 represents the first major resistance level. A sustained break above this barrier would be needed to invalidate the prevailing bearish outlook.

On the downside, the lower boundary of the descending channel near $3,718.03 remains the next key support. A strong reaction from buyers at this level would be required to signal that bearish momentum is beginning to fade.

Fed Chair Kevin Warsh Reinforces Hawkish Policy Outlook

Federal Reserve Chair Kevin Warsh reaffirmed the central bank's commitment to price stability during his first congressional testimony, signaling that at least one additional interest rate hike before year-end remains a possibility.

His comments largely offset the moderate weakness in the U.S. dollar and became a major factor weighing on non-yielding assets such as gold.

Soft US CPI Fails to Shift Long-Term Fed Expectations

According to the U.S. Bureau of Labor Statistics, headline Consumer Price Index (CPI) fell 0.4% in June, marking the largest monthly decline since April 2020 and exceeding market expectations for a 0.1% decline.

Core CPI, which excludes volatile food and energy prices, remained unchanged during the month, missing forecasts for a 0.3% increase.

On an annual basis, headline inflation slowed to 3.5%, while core inflation eased to 2.6%, both coming in below economists' expectations.

The softer inflation report initially prompted traders to reduce expectations of additional Federal Reserve tightening, sending the U.S. dollar to its lowest level in nearly four weeks.

However, the dollar quickly recovered after Warsh emphasized that the Federal Reserve would not tolerate persistently elevated inflation while highlighting the resilience of the U.S. economy.

Rising Oil Prices Revive Inflation Risks

Crude oil recently climbed to its highest level in nearly a month, increasing concerns that higher energy costs could reignite inflation and strengthen the case for further monetary tightening by the Federal Reserve.

According to the CME FedWatch Tool, investors continue to price in the possibility of another Fed rate hike in either September or December.

At the same time, geopolitical tensions remain elevated after the United States launched another round of airstrikes against Iran, while Tehran responded with attacks on U.S. military assets across the Gulf region. President Donald Trump also warned that the United States would target Iranian bridges and power plants unless Tehran returned to the negotiating table.

Gold Outlook: Focus Shifts to US PPI and Middle East Developments

The combination of a relatively hawkish Federal Reserve, elevated oil prices, and persistent geopolitical risks continues to support the U.S. dollar and suggests that the path of least resistance for gold remains to the downside.

Investors are now awaiting the release of the U.S. Producer Price Index (PPI), along with the second day of Federal Reserve Chair Kevin Warsh's congressional testimony, for fresh clues on the future direction of U.S. monetary policy.

Meanwhile, any further escalation in the Middle East conflict is likely to keep financial markets volatile and create new short-term trading opportunities in the precious metals market.

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