Gold Price Forecast: XAU/USD Remains Bearish as Iran Tensions Fuel Inflation Risks and Fed Rate Hike Bets
Gold prices remained under pressure as escalating geopolitical tensions between the United States and Iran boosted crude oil prices, reviving inflation concerns and strengthening expectations that the Federal Reserve may keep interest rates higher for longer. The renewed outlook for tighter monetary policy continues to support the US dollar and limits upside potential for the precious metal.
Gold Technical Analysis: XAU/USD Holds Bearish Bias Below 200-Day SMA
The XAU/USD pair continues to trade with a short-term bearish bias, remaining below the 200-day Simple Moving Average (SMA) and within a broader descending parallel channel.
Although momentum indicators suggest selling pressure has eased slightly, they do not yet signal a sustainable bullish reversal. The Moving Average Convergence Divergence (MACD) remains marginally positive at 9.43, while the Relative Strength Index (RSI) stands near 40.77, indicating temporary stabilization rather than a confirmed recovery.
A decisive break and sustained close below the key psychological level of $4,000 would expose the year-to-date low around $3,943–$3,942, recorded in June. Further downside could extend toward the channel's lower boundary near $3,675.71, a major structural support level. A clear breakdown below this area would reinforce the broader bearish trend.
On the upside, immediate resistance is located near the upper boundary of the descending channel at $4,093.63, where renewed selling interest is expected to emerge. A sustained move above this level would shift focus toward the 200-day SMA around $4,495.94, which represents the next major resistance zone.
Softer US Producer Inflation Weighs on the Dollar
The US Bureau of Labor Statistics (BLS) reported on Wednesday that the Producer Price Index (PPI) unexpectedly declined 0.3% in June, following a downwardly revised 0.6% increase in the previous month.
On an annual basis, producer inflation slowed to 5.5% from 6.0% in May. The report followed the sharpest monthly decline in the US Consumer Price Index (CPI) since April 2020, reinforcing signs that underlying inflationary pressures are easing.
Following the data, traders reduced expectations for an imminent Federal Reserve interest rate hike, pushing the US Dollar Index (DXY) to its lowest level since June 18 and providing temporary support for gold prices during Wednesday's trading session.
Iran Conflict Keeps Oil Prices Elevated and Revives Inflation Fears
Despite softer inflation data, energy-driven inflation risks remain elevated as crude oil prices continue to trade near one-month highs amid escalating tensions between the United States and Iran and ongoing concerns over potential supply disruptions through the Strait of Hormuz.
The United States launched another round of airstrikes against Iranian targets on Wednesday, hitting coastal defense systems and missile infrastructure. Iran responded with drone and missile attacks against US-linked military facilities across the region.
US President Donald Trump also warned that additional critical Iranian infrastructure could become military targets should the conflict continue to escalate.
Meanwhile, Iran's Islamic Revolutionary Guard Corps (IRGC) threatened to expand the conflict by targeting additional regional energy supply routes, raising concerns that Tehran could use its Houthi allies in Yemen to disrupt shipping through the Bab el-Mandeb Strait.
The heightened geopolitical risks continue to support crude oil prices, reviving inflation concerns and increasing market expectations that the Federal Reserve could deliver at least one 25-basis-point interest rate hike in 2026.
That outlook is likely to prevent aggressive US dollar selling and suggests that the path of least resistance for gold prices remains tilted to the downside in the near term.