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Gold Price Falls Below $4,600 After Thursday Rally Amid Strong USD and Fed Outlook
Gold prices slipped back below the $4,600 level after a brief rally on Thursday, facing renewed bearish pressure as the US Dollar (USD) remains resilient. Ongoing uncertainty surrounding US–Iran tensions, combined with speculation over Japan’s possible forex intervention, has weighed on the XAU/USD pair.
During the previous session, gold managed to break above $4,600 and the 100-hour Simple Moving Average (SMA), triggering short-covering activity in intraday trading. However, the upward move stalled near $4,650, aligning with the 38.2% Fibonacci retracement level from the April swing high decline. Technical indicators show mixed signals: the Relative Strength Index (RSI) stands at 58.33, indicating moderate bullish momentum without entering overbought territory, while the Moving Average Convergence Divergence (MACD) remains slightly negative. This suggests that bullish attempts are still tentative despite prices holding above short-term trend levels.
A sustained breakout above the 38.2% Fibonacci level at $4,651.19 is needed to confirm further upside potential. If bullish momentum continues, the next resistance level lies at the 50% retracement mark near $4,696.20. On the downside, immediate support is seen at the 100-hour SMA around $4,623.78. A break below this level could expose the 23.6% Fibonacci retracement at $4,595.49, with a deeper decline potentially targeting the monthly low near $4,505.46.
Fundamental Outlook: Fed Policy and Geopolitics Weigh on Gold
Gold remains under pressure as the Federal Reserve maintains a hawkish stance, supporting the US Dollar and limiting upside for the non-yielding metal. The precious metal is currently on track to post losses for a second consecutive week.
Geopolitical tensions also continue to influence market sentiment. US President Donald Trump rejected Iran’s proposal to reopen the Strait of Hormuz and lift the blockade, instead maintaining a firm stance on nuclear negotiations. Reports suggesting potential new US military action against Iran have heightened fears of further escalation, reinforcing the safe-haven appeal of the USD while capping gold’s gains.
Meanwhile, the Federal Reserve kept its benchmark interest rate unchanged at 3.50%–3.75% on Wednesday. Notably, the decision saw the highest level of dissent since 1992, with three policymakers opposing the current policy stance. Strong US economic data released Thursday further supports expectations that rates may remain elevated for longer.
According to the US Bureau of Economic Analysis, the Personal Consumption Expenditures (PCE) Price Index rose 0.7% month-over-month in March, with the annual rate climbing to 3.5% from 2.8% in February. Core PCE, which excludes food and energy, increased 3.2% year-over-year, up from 3.0% previously. Additionally, preliminary GDP data showed the US economy expanded at an annualized rate of 2.0% in Q1 2026, a sharp improvement from the revised 0.5% growth in Q4 2025.
Despite this, market expectations for at least one 25 basis point rate cut by the Fed in 2026 have risen to over 15%, up from just 1.3% a day earlier. This shift is preventing aggressive USD buying and helping limit further downside in gold prices.
Looking ahead, traders are closely watching upcoming US economic data releases, starting with the ISM Manufacturing PMI due Friday. At the same time, developments in the Middle East will remain a key driver of USD movement and overall gold market direction.