On Friday, the price of gold remained below 4,700 USD per ounce. For the week, the price is expected to decline by approximately 3.0%, as escalating tensions between the US and Iran over the Strait of Hormuz support rising energy prices and heighten concerns about inflation.
Both sides are maintaining their blockades of this strategically vital waterway, with peace talks showing little progress.
US President Donald Trump said on social media on Thursday that he had ordered the US Navy to target and destroy any vessels laying mines in the strait. US troops also boarded a supertanker carrying Iranian oil in the Indian Ocean.
Meanwhile, the truce between the US and Iran has been extended indefinitely, as Washington awaits a new formal proposal from Tehran. The truce between Israel and Lebanon has also been prolonged for three weeks.
High energy prices are reinforcing inflation risks and strengthening expectations of potential interest rate hikes by central banks. Collectively, these factors are weighing on gold, reducing its appeal as a non-yielding asset.
Technical Analysis
On the H4 XAU/USD chart, gold is trading within a consolidation range around the 4,685 USD level. An upside breakout could push prices towards 4,755 USD, while a downside break could lead to a decline towards 4,616 USD. The MACD indicator confirms the current downside momentum, with its signal line below the centre line and pointing firmly downwards.
On the H1 chart, gold has broken below the 4,693 USD level and continues to move lower towards 4,616 USD. A corrective rebound towards 4,750 USD (testing from below) is likely, followed by a possible decline to 4,690 USD. The Stochastic oscillator supports this scenario, with its signal line below 50 and pointing firmly downwards towards 20.
Conclusion
Gold is poised to close the week nearly 3.0% lower amid ongoing geopolitical tensions between the US and Iran, which continue to dominate market sentiment. Both sides maintain their blockades of the Strait of Hormuz, while peace talks show little progress. President Trump’s stance, ordering the Navy to destroy mines and board an Iranian oil tanker, has kept energy prices elevated and inflation concerns firmly in focus. Although truces with Iran and Lebanon have been prolonged, the lack of meaningful progress towards a resolution continues to weigh on gold. With central banks potentially leaning towards rate hikes amid persistent inflation, the non-yielding metal faces a challenging environment. Technical indicators suggest further downside towards 4,616 USD in the near term.
