Gold Price Forecast: XAU/USD tests support at $4,450 as the US Dollar rallies
- XAU/USD keeps trading lower and tests intra-week lows at $4,450.
- Growing uncertainty about Iran's war and strong US data are buoying the US Dollar this week.
- Technical indicators show growing bearish pressure as Gold approaches key supports.
Gold (XAU/USD) resumed its near-term downtrend on Wednesday, with bears pushing against the intra-week lows at the $4,450 area. Flaring tensions in the Middle East have boosted Oil prices, while solid US data released this week endorsed hopes of Federal Reserve (Fed) rate hikes in 2026, setting the ideal conditions for the US Dollar rally.
The US military has launched new strikes on Iran’s Qeshm Island and Iranian missiles and drones hit the International Airport of Kuwait and targeted US military bases in Gulf countries. These reports increased pressure on an already fragile ceasefire and sent Oil prices higher, boosting demand for the safe-haven US Dollar.
In the macroeconomic front, US data released on Tuesday revealed that job openings increased in April to their highest levels in nearly two years, confirming some stabilisation in the labour market after a weak 2025. Traders will be attentive to the US ADP Employment release and ISM Services Purchasing Managers’ Index (PMI) figures, due later today, although the highlight of the week will be Friday’s Nonfarm Payrolls report, which will be carefully analysed for hints about the Fed's monetary policy path.
Technical Analysis: Gold approaches key supports
The daily chart shows XAU/USD trading at $4,466, embedded in a downward-sloping channel, and holding marginally above the intra-week low of $4,450 and the key 200-day simple moving average (SMA) near $4,420.
This keeps the near-term bias bearish, with momentum indicators supporting that view. The Relative Strength Index (RSI) around 41 and a negative Moving Average Convergence Divergence (MACD) reading suggest that bounces are likely to be sold unless the landscape changes radically.
Further depreciation below the mentioned 200-day SMA, an indicator closely watched by markets, will expose two-month lows at $4,366 ahead of the channel bottom, now around $4,320.
Upside attempts, on the contrary, should breach the confluence of last Friday's high and the channel top, around $4,590, and a previous support in the area of $4,600 (May 11, 12 lows) to ease downward pressure.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.