Gold (XAU/USD) struggled to maintain its previous day's modest gains, attracting renewed selling during the Asian session on Thursday as the US Dollar (USD) gained positive traction for the third consecutive day. This USD strength was driven by ongoing geopolitical tensions between the US and Iran, particularly due to the American naval blockade of Iranian ports and a standoff over the Strait of Hormuz. US President Donald Trump announced a temporary extension of the Iran ceasefire on Tuesday, just hours before its expiration, but investors remain skeptical about a durable de-escalation given the lack of progress in peace talks and rising tensions. Trump stated that the US Navy blockade of Iranian ports would continue, while Iran has demanded the removal of the blockade as a precondition for resuming negotiations. Additionally, the Islamic Revolutionary Guard Corps (IRGC) reported capturing two container ships on Wednesday, marking its first seizures since its war with the US and Israel began in February. This development has heightened the risk of further escalation and kept geopolitical risks elevated, supporting the USD's reserve currency status and exerting pressure on gold prices [1].
Continued disruptions to energy supplies through the Strait of Hormuz have supported elevated crude oil prices, contributing to a significant surge in global inflation. This has fueled speculation about a more hawkish stance from major central banks, including the US Federal Reserve (Fed). Although Fed officials projected one rate cut by the end of this year, persistent inflation and resilient economic activity have increased the threshold for a reduction in borrowing costs, potentially forcing the Fed to adopt a wait-and-see approach. This scenario has further supported the USD and driven flows away from non-interest-bearing assets like gold [1].
From a technical perspective, the XAU/USD pair currently sits near the lower boundary of an upward-sloping parallel channel, indicating a broadly neutral near-term tone. The Relative Strength Index (RSI) is near 39, suggesting fading bullish momentum but not yet oversold conditions, while the Moving Average Convergence Divergence (MACD) remains in negative territory, reinforcing that upside attempts may struggle until momentum improves. A convincing break below the trend-channel support around $4,691 could expose the prior structural base near $4,568 and pave the way for deeper losses if selling accelerates [1].
CONCLUSION
Gold remains under pressure near $4,700 amid heightened geopolitical risks and a stronger US Dollar, driven by persistent tensions in the Strait of Hormuz and expectations of a more hawkish Fed stance. Technical indicators suggest further downside risk if key support levels are breached, with market sentiment leaning negative as investors favor the USD over gold.