XAU/USD Technical Analysis: Bearish Pressure Remains Amid Geopolitics

Market Overview and Geopolitical Impact

Gold (XAU/USD) is currently trading near the $4,700 psychological level, struggling to maintain a bullish bias. Heightened geopolitical tensions between the United States and Iran, specifically concerning the Strait of Hormuz, are significantly influencing market sentiment and providing a tailwind for the U.S. dollar.

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Escalating friction, characterized by U.S. naval activity near Iranian ports and subsequent retaliatory rhetoric, has diminished the likelihood of rapid de-escalation. As investors seek safe-haven assets, the U.S. dollar continues to outperform, effectively placing downward pressure on gold prices.

Macroeconomic and Monetary Policy Drivers

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Persistent energy supply disruptions are sustaining elevated oil prices, raising concerns regarding global inflation. This inflationary environment has tempered expectations for Federal Reserve monetary policy easing, with markets currently pricing in only one 25-basis-point rate cut for 2026.

The outlook for higher U.S. Treasury yields strengthens the dollar, which remains a headwind for non-yielding assets such as gold. While the University of Michigan Consumer Sentiment Index is on the Friday calendar, market participants remain primarily focused on the geopolitical landscape as the main driver of volatility.

Technical Analysis and Outlook

From a technical standpoint, the XAU/USD pair maintains a bearish outlook. Oscillators have shifted into negative territory, confirming increasing momentum for sellers and suggesting that any corrective upward moves may present selling opportunities.

Price action remains vulnerable; should gold fail to hold the $4,645 support level, a decline toward $4,500 is probable. Conversely, for the bulls to regain market control, the price would need to consistently break above the 20-day and 100-day Simple Moving Averages.

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