Gold (XAU/USD) maintains its offered tone below the $4,500 mark through the first half of the European session on Thursday. Wednesday’s hawkish FOMC Minutes turn out to be a key factor undermining the bullion. The US Dollar (USD), however, struggles to attract any meaningful buyers and drops to a fresh three-month low. This, in turn, limits the downside for the commodity and keeps it close to the highest level since early June.
Minutes from the July 28-29 FOMC meeting revealed that Federal Reserve officials indicated they would need to raise interest rates soon unless there was more progress on bringing down inflation. Meanwhile, the recent US macro data releases have shown modest price increases on a monthly basis in July, though inflation remains well above the Federal Reserve’s (Fed) 2% target. Moreover, investors remain worried that higher energy prices due to the Middle East crisis will rekindle inflationary pressures. This keeps bets for at least one Fed rate hike in 2026 on the table, which, in turn, is seen driving flows away from the non-yielding Gold.
In the latest development, President Donald Trump said the US will launch the most crushing economic operation against Iran and threatened severe financial penalties on any nation that helps Tehran evade sanctions or does business with Iran. This comes as the US and Iran remain deadlocked over the Strait of Hormuz, which keeps the war-risk premium in play. Meanwhile, the USD selling bias remains unabated on the back of sliding US bond yields. This, in turn, warrants some caution before confirming that the Gold price has topped out in the near-term and positioning for a corrective decline.
The US Department of the Treasury stepped in to provide relief to bond markets and announced on Wednesday that it would at least double buyback operations for long-dated government debt starting in September. This led the 30-year yield to tumble from its highest level since June 2007. According to TD Securities, the “announcement that the US Treasury is increasing the size of liquidity support buyback operations” has “given metals a jolt of life,” with the expanded program helping to underpin renewed interest in precious metals such as Gold.
Traders now look forward to Thursday’s US economic docket, featuring the release of the Philly Fed Manufacturing Index and Weekly Initial Jobless Claims. This, along with speeches from influential FOMC members and the incoming geopolitical headlines, will drive the USD and the Gold price.
XAU/USD daily chart
Technical Analysis
The XAU/USD pair faces rejection near the $4,510-$4,515 confluence – comprising the 200-day Simple Moving Average (SMA) and the 61.8% Fibonacci retracement of the April-June decline. This hints at waning upside scope in the short run. That said, the Relative Strength Index (RSI) at 65.17 hovers near overbought territory while the Moving Average Convergence Divergence (MACD) indicator remains in positive terrain, suggesting underlying bullish momentum.
Meanwhile, initial support aligns with the 50.0% retracement at $4,404, ahead of a deeper structural cushion at the 38.2% level near $4,295 and the 23.6% Fibo. at $4,159, where buyers could attempt to stabilize any corrective slide. On the topside, bulls need to wait for a move beyond the $4,510-$4,515 confluence before positioning for additional gains toward the 78.6% Fibo. level at $4,670 and ultimately the cycle high near $4,869.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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