- Gold prices are likely to remain below $3,400 as investors assess the likelihood of a U.S. attack on Iran.
- The Federal Reserve maintained current interest rates on Wednesday while adjusting its targets for the next two years upward.
- The 20-day EMA is providing solid support for gold prices.
On Thursday, during European trading hours, gold prices (XAU/USD) are expected to fluctuate within a narrow range beneath the $3,400 resistance level. Following the Federal Reserve’s announcement on Wednesday, the potential gains for gold appear restrained due to the revised interest rate forecasts for 2026 and 2027.
The Fed pointed out that the heightened risk of inflation, arising from tariff measures introduced by President Donald Trump, has led to a rise in inflation targets for 2026 and 2027, now expected at 3.6% and 3.4% respectively.
While gold tends to perform well during periods of economic expansion, the prospect of increased long-term interest rates from the Fed poses challenges for assets like gold.
Nonetheless, the appeal of the yellow metal remains strong amid escalating tensions in the Middle East.
Market participants express concern about the state of Iran’s economy, especially with the belief that the U.S. might spring a surprise on Tehran, which is already entangled in a conflict with Israel.
Reports from Bloomberg indicate that U.S. officials are preparing for potential action against Iran imminently. President Trump has indicated a readiness to use military force against Iran’s nuclear sites, stating, “I might do that. I can’t do it,” when asked about possible airstrikes earlier in the day.
In theory, an uptick in geopolitical tensions typically drives demand for safe-haven assets like gold.
Gold Technical Analysis
Gold prices appear to be forming ascending triangles on daily charts, suggesting a contraction in volatility. The top horizontal resistance of this pattern sits around the $3,500 mark, established since April 22, while an upward trend line can be traced from the lowest point of $2,957 on April 7.
The 20-day EMA continues to lend support to gold prices close to $3,350.
The 14-day RSI is struggling to break above 60.00; a move past this threshold could spark new bullish momentum.
Looking upwards, if gold can decisively break through the psychological barrier of $3,500, it might enter a more favorable trading zone, with potential resistance points around $3,550 and $3,600.
Conversely, if gold falls below the recent low of $3,245 established on May 29, it could retrace to the significant support level of $3,200, perhaps even dipping to the May 15 low of $3,121.
Gold Daily Chart
Gold FAQ
Gold has held significant value throughout human history, widely recognized as a means of value exchange. Besides its allure, it has become a safe haven asset—investors often turn to gold in times of uncertainty. It’s also regarded as a hedge against inflation and currency depreciation, largely because its value isn’t tied to any specific issuer or government.
The central bank, being a major holder of assets, typically invests in gold to stabilize currency during uncertain times. By diversifying reserves, central banks can enhance the perceived strength of the economy. In 2022, central banks purchased 1,136 tonnes of gold worth around $70 billion, the largest purchase recorded. Economies like China, India, and Turkey have been notably increasing their gold holdings.
Gold generally moves inversely with the U.S. dollar and Treasury bonds—both regarded as safe assets. As the dollar declines, gold’s value generally rises, providing a means for diversification during market fluctuations. Similarly, gold often reacts negatively to risk asset rallies, as falling in high-risk markets tends to bolster gold’s standing.
A myriad of factors contributes to price fluctuations. Geopolitical fears or recession worries can quickly elevate gold prices due to its safe haven status. Since gold doesn’t yield returns, its value typically climbs in lower interest rate environments. However, increased interest rates can negatively impact its appeal. Ultimately, price movements are most heavily influenced by the performance of the U.S. dollar since gold is priced in dollars. Generally, a robust dollar can suppress gold prices, while a weaker dollar tends to boost them.
