Gold pulled back from above $4,200 as a stronger US Dollar drew safe-haven flows from Strait of Hormuz tensions. Softer Fed rate-hike expectations and steady central bank buying are cushioning the decline, keeping the broader bias tilted higher.
Gold (XAU/USD) turned lower after climbing above $4,200 in Asian trading, a two-week peak that ended a three-session winning run. The US Dollar drew safe-haven inflows as tensions around the Strait of Hormuz stayed elevated, weighing on the metal.
Hormuz tensions lift the Dollar
The strategic waterway remains tense despite an interim US-Iran understanding that TradingPedia described as fragile. Iran's ambassador to China said on Saturday that Tehran plans to introduce new service fees for ships transiting the route, a proposal the United States has rejected. That backdrop keeps a geopolitical risk premium in place and supports fresh demand for the Greenback, which in turn pressures Gold.
Fed and central banks cushion the downside
But the Dollar's upside looks constrained. Traders have scaled back expectations for further Federal Reserve rate increases after weaker-than-expected US jobs data released last Thursday pointed to cooling labor conditions. Softening inflation concerns, helped by a recent drop in crude oil prices, could let the Fed stay patient and limit the depth of any correction in Gold.
Central bank demand adds another floor. A World Gold Council survey released last week found that nearly 90% of respondents expect global central bank gold reserves to rise over the coming year. The People's Bank of China added another 320,000 ounces of Gold in May, its 19th straight month of increases.
Key technical levels
On the 4-hour chart, Gold hovers near the 100-period Simple Moving Average in the $4,150-$4,145 band after Friday's break above it and through the 23.6% Fibonacci retracement of the April-June decline. The Relative Strength Index sits around 63, still constructive.
A break below the 100-period SMA near $4,147 would open the door toward the structural low region at $3,940. On the upside, resistance sits at the 38.2% retracement around $4,302, with further barriers at $4,415 and $4,527. A separate FXEmpire forecast put spot Gold at $4,153, holding above a downward trendline near $4,091.
Sources: TradingPedia, FXEmpire
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