12.05.202612:40 Forex Analysis & Reviews: XAU/USD Price Analysis and Forecast: Tensions Around Iran Support the US Dollar

Today, gold prices (XAU/USD) continue their intraday pullback from the three-week high recorded earlier this Tuesday. At the start of the European session, prices fell below the $4,700 mark, though they are currently returning to that level. This decline remains limited as traders eagerly await new US consumer inflation data.

At the same time, negative developments in the Middle East are being compounded by concerns over a possible failure to reach a peace agreement between the United States and Iran, strengthening the US dollar's position as a reserve currency. Diplomatic setbacks continue to keep oil prices elevated, fueling inflation risks and increasing the likelihood that central banks, including the US Federal Reserve, will maintain a more "hawkish" stance. All of this creates conditions for moderate strengthening of the dollar, which in turn restrains gains in gold prices.

In particular, US President Donald Trump rejected Iran's proposal to end the conflict, which has now lasted for more than two months. The reason lies in disagreements over Iran's nuclear program and tensions surrounding the strategically important Strait of Hormuz.

Moreover, CNN reported that Trump is losing patience over the continued blockade of this vital waterway and is dissatisfied with how the Iranian side is conducting ceasefire negotiations. Some presidential advisers note that he is now more seriously considering the possibility of resuming large-scale military operations. This raises fears of a new escalation of the conflict and further strengthens the US dollar, putting additional pressure on gold.

Meanwhile, traders continue to assess the probability of another Federal Reserve interest rate hike before the end of the year, currently estimated at around 25%. These expectations persist amid concerns that the sharp rise in energy prices caused by the conflict could once again trigger inflationary pressure. Therefore, market participants remain focused on the key indicator — the US Consumer Price Index (CPI), whose release is expected to influence forecasts regarding future Federal Reserve policy and demand for the dollar. However, expectations of a hawkish Fed stance continue to support the dollar and contribute to gold's intraday pullback from the $4,775–$4,774 levels. Nevertheless, the lack of continued downward movement calls for caution before opening bearish positions on gold.

From a technical analysis perspective, the XAU/USD pair is showing resilience below the 20-day simple moving average (SMA). A return above $4,700 serves as support for the bulls. If prices fail to hold this level, the nearest support will be at $4,645, where the 9-day SMA is located. A breakout above the psychological $4,800 level would open the way toward the next major level at $4,900.

The Relative Strength Index (RSI) remains slightly above 50, indicating moderate bullish sentiment, while the MACD histogram fluctuates just below zero.