Gold (XAU/USD) continues to trade on a weaker note after failing to break above the $4,800 level in the previous session. However, the downside remains limited as the metal moves within a familiar range during Friday’s Asian session. Prices are holding above $4,750 as traders stay cautious ahead of the upcoming US Consumer Price Index (CPI) report, which is expected to provide clearer direction.
Market expectations suggest that inflation likely increased in March, driven by the recent surge in Crude Oil prices linked to geopolitical tensions. This could reduce the chances of near-term rate cuts by the US Federal Reserve. Supporting this view, the FOMC meeting minutes from March indicated that policymakers are not in a hurry to ease monetary policy due to persistent inflation risks, particularly those stemming from Middle East energy disruptions. Meanwhile, ongoing tensions around the Strait of Hormuz are lending support to the US Dollar, which continues to weigh on gold prices.
Geopolitical developments remain a key driver. Iran recently halted shipping through the Strait of Hormuz following Israeli strikes in Lebanon, escalating tensions in the region. US President Donald Trump criticized Iran’s handling of the situation and warned of potential military action if negotiations fail. These developments have pushed oil prices higher, adding to inflation concerns and strengthening expectations of a more hawkish Fed stance. Despite this, gold’s decline remains limited due to the lack of strong selling momentum.
At the same time, there are signs of possible diplomatic progress. Israeli Prime Minister Benjamin Netanyahu has called for direct talks with Lebanon, while US officials confirmed that discussions are expected to take place in Washington next week. Additionally, phased US-Iran negotiations are scheduled over the weekend, keeping hopes of a ceasefire alive. This optimism is preventing a sharp rise in the US Dollar and helping gold avoid deeper losses.
Technical Outlook: Gold Moves in a Range with Slight Bearish Bias
From a technical standpoint, gold is showing a neutral to slightly bearish trend as it trades below the 200-period Simple Moving Average (SMA) on the 4-hour chart. This level aligns with the 61.8% Fibonacci retracement of the recent decline, making it a strong resistance zone.
The Relative Strength Index (RSI), currently near 56, suggests mild buying interest after the recent pullback. However, the Moving Average Convergence Divergence (MACD) has slipped slightly into negative territory, indicating fading bullish momentum and reinforcing resistance near $4,883.
If prices manage to break above this resistance zone, the next targets could be around $4,908, followed by $5,131 and $5,415. On the downside, immediate support lies near $4,751. A break below this level could expose further declines toward $4,595 and $4,401, with stronger support seen around $4,087.
