Gold Price Forecast: XAU/USD pulls back below $4,100 weighed by higher US yields
- Gold dips below $4,100 after rejection at $4,185 on Wednesday.
- Rising Oil prices have reactivated concerns about higher inflationary risks, pushing US Treasury yields to fresh highs.
- Technical indicators show bullish pressures unwinding.
Gold (XAU/USD) trades lower on Thursday, snapping a four-day rally. Price action is exploring levels below $4,100 at the time of writing, following a rejection at $4,165 on Wednesday as the surge in Oil prices, with the Brent barrel trading above $90.00, has reactivated concerns about higher inflationary risks, sending US Treasury yields to fresh highs, and posing a heavy weight for precious metals
Analysts at TD see the recent Gold recovery as a corrective reaction, likely to be short-lived, as the move "does not seem to be an aggressive extension of long positions, but is rather driven by short covering and dip buying, after technical supports held during the preceding selloff."
Looking ahead, TD Securities experts observe that "there are no fundamental reasons to think that the US rate and FX environment will be conducive to increasing long gold exposure any time soon." In their view, "it is likely that the Middle East war-driven oil price increases will continue to increase the probability of a Fed rate hike," limiting the scope for a more durable upside extension for Gold.
Technical Analysis: Momentum indicators show bearish signals
XAU/USD trades at $4,087.60, holding a constructive near-term bias although the 4-hour Relative Strength Index is nearing the 50 midline, which, together with the bearish cross of the Moving Average Convergence Divergence (MACD) line, suggests that bulls have given up and sellers are taking back control.
On the downside, immediate support is seen at the reverse trendline now around $4,005, followed by the year-to-date lows at the $3,940 area. Furhter down, the late October 2025 low just below $3,900 emerges as the next target. Rallies, on the other hand, are expected to meet significant resistance at the $4,200 area, where bulls were capped in late June and early July. This area needs to give way to confirm a deeper recovery, aiming for mid-June highs at the $4,385 area.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
