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04.06.202600:35 Forex Analysis & Reviews: XAU/USD: Price Balances on the Edge at 4450.00

Gold prices enter the middle of the week in a highly vulnerable position. On Wednesday, the precious metal continued its decline, consolidating near the weekly low of 4445.00 at the time of this review. XAU/USD is retreating from the resistance zone of 4590.00–4600.00, where prices have repeatedly failed to break through over the last three weeks during attempts to rise above the "round" mark of 4500.00.

Investors are on edge, assessing the renewed escalation of the conflict in the Strait of Hormuz and growing expectations of a "hawkish" pause from the Federal Reserve, which is exerting significant pressure on the non-yielding asset.

Fundamental Background: Geopolitical Shock and the Fed's Hawkish Turn

Hopes for a diplomatic breakthrough that temporarily supported markets at the end of May have been completely erased by a new wave of military escalation in the Persian Gulf.

Key Events of the Last 24 Hours

• US Strikes on Iran: The US Central Command (CENTCOM) confirmed carrying out "defensive strikes" on the Iranian island of Qeshm in the Strait of Hormuz.
• Iran's Response: Iran's Islamic Revolutionary Guard Corps (IRGC) attacked the headquarters of the US Fifth Fleet and launched missiles and drones at targets in Kuwait and Bahrain (most were intercepted).
• Escalation in Lebanon: Hostilities between Israel and Hezbollah have also intensified, expanding the conflict zone.

Despite the latest statements from US President Donald Trump claiming that an agreement to extend the ceasefire and open the strait could be reached "as early as next week," Secretary of State Marco Rubio took a hard stance. He stated that Washington would not lift sanctions on Iran in exchange for the full opening of the Strait of Hormuz, and any easing of sanctions would only be possible after significant concessions on the nuclear program.

This dynamic of mutual accusations and strikes (along with the lack of diplomatic breakthroughs) instantly returned the geopolitical premium to prices. However, contrary to the logic of a "safe haven," this strengthened the dollar. Rising oil prices and uncertainty have renewed inflation expectations and hawkish rate prospects for the Fed.

Alongside geopolitics, the main driver of pressure remains the Fed's reevaluation of monetary policy expectations. According to the CME FedWatch tool, markets are pricing in nearly a 60% probability of a 25 bps rate hike by the end of 2026.

Key Hawkish Signals This Week

• JOLTs Data: The number of job openings in the US soared to 7.618 million in April (forecast: 6.88 million), the highest level since May 2024. This indicates an overheating labor market.
• Comments from Fed Officials: Cleveland Fed President Beth Hammack warned that inflation may require action "soon," and the central bank is firmly committed to returning inflation to 2%. Dallas Fed President Lorie Logan also stated that "it is still too early to even think about rate cuts" due to persistent inflation risks.
• 10-Year US Treasury Yields: Yields have settled above 4.40% and rose an additional 0.08% on Wednesday. High yields increase the opportunity costs of holding gold, which does not provide interest income, putting direct pressure on prices. Strong labor market data casts doubt on the need for rate cuts, and the Fed may face challenges in justifying easing policy.

Brief Technical Analysis

From a technical standpoint, the price has confirmed a trend change, forming classic bearish signals on the 4-hour chart for XAU/USD.

The price remains below the 50-, 144-, and 200-period exponential moving averages, indicating a classic sign of continued short-term bearish control.

• RSI (14) is around 44, indicating weak bearish momentum but not oversold, leaving room for further declines.
• OsMA is showing declining histogram bars below the signal (zero) line, confirming that recent attempts at stabilization are losing strength within a broader downward structure.
• Stochastic has "dipped" into the oversold zone and has not yet shown signs of reversal.

On the daily chart, the price stays below the 144-day EMA (4525.00) and the 50-day EMA (4625.00). Only the 200-day EMA (4380.00) is preventing the metal from falling deeper.

The main scenario anticipates continued downward movement. A confident break and consolidation below the key support level of 4380.00 will open the door to 4300.00 (the area of strong institutional demand), and then down to 4255.00 (the 50-day EMA on the weekly chart and the breakdown zone of the mid-term upward trend).

Key Events

Conclusion

Gold is under significant double pressure. The escalation of the conflict in the Strait of Hormuz and rising oil prices are influencing dollar strength, while the Fed's hawkish stance continues to raise expectations for interest rate hikes.

The current technical picture remains bearish, with the price holding below the 200-period EMA on the 4-hour chart. The market retains its downward structure: each new rise meets selling pressure, and highs are gradually decreasing.

The key zone of 4525.00-4400.00 will be the battleground in the coming days. A technical breakdown below this area will confirm the bearish scenario and open the pathway to 4380.00 and 4300.00. A return above 4525.00 would be the first sign of weakening pressure.

Developments in the Middle East continue to influence risk sentiment and the direction of the USD and gold, while the technical picture favors sellers. Investors should closely monitor Friday's labor market data—it will determine whether the dollar gains enough momentum to break through the 4380.00 level.

*تعینات کیا مراد ہے مارکیٹ کے تجزیات یہاں ارسال کیے جاتے ہیں جس کا مقصد آپ کی بیداری بڑھانا ہے، لیکن تجارت کرنے کے لئے ہدایات دینا نہیں.

Jurij Tolin,
Analytical expert of InstaSpot
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