Gold (XAU/USD) continues to trade with a negative intraday bias on Thursday, holding near the psychologically significant $4,700 level while struggling to attract meaningful dip-buying interest. Despite brief periods of stabilization, the broader tone remains fragile as the metal fails to sustain rebounds within its ascending channel structure. ArcheInvest’s team presents a well-structured and insightful explanation of this topic in their article.
The precious metal is facing fresh supply pressure, reflecting a market environment increasingly dominated by US Dollar strength, elevated geopolitical uncertainty, and shifting expectations around monetary policy normalization. While price action has not yet confirmed a breakdown, the inability to reclaim higher ground signals that bullish momentum is fading rapidly.
Geopolitical Risks and Hormuz Tensions Support USD Demand
A key driver behind current market dynamics is the renewed escalation of geopolitical risk surrounding the Strait of Hormuz, a critical chokepoint for global energy flows. Ongoing tensions between the United States and Iran continue to underpin safe-haven flows into the US Dollar (USD), reinforcing its status as the dominant reserve currency.
Recent developments include heightened maritime friction, with the US maintaining a naval blockade of Iranian ports, while Iran continues to demand its removal as a prerequisite for negotiations. The situation deteriorated further after reports that the Islamic Revolutionary Guard Corps (IRGC) seized container vessels, marking a renewed phase of maritime confrontation.
Although the US President announced a temporary extension of the ceasefire, markets remain unconvinced about a durable de-escalation. The lack of tangible diplomatic progress has left traders pricing in a persistent geopolitical risk premium, which paradoxically benefits the USD while failing to provide sustained support for gold.
Inflation Pressures and Fed Expectations Weigh on Non-Yielding Gold
Beyond geopolitics, macroeconomic conditions are also acting as a headwind for bullion. Disruptions in energy supply routes through the Strait of Hormuz have contributed to higher crude oil prices, fueling renewed concerns about global inflationary pressures.
Rising inflation expectations have significantly altered the outlook for the Federal Reserve (Fed). Although policymakers have previously signaled the possibility of at least one rate cut by year-end, recent data suggest that sticky inflation and resilient US economic activity are raising the threshold for policy easing.
This shift has driven markets toward a less dovish Fed repricing, with traders increasingly betting on a prolonged period of elevated interest rates. Such expectations are typically bearish for non-yielding assets like gold, which does not offer interest income and becomes less attractive when real yields remain high.
As a result, the USD continues to gain traction for a third consecutive session, further compressing upside potential for XAU/USD. The combination of stronger dollar flows and reduced rate-cut expectations is reinforcing the current corrective structure in gold prices.
Technical Analysis: Ascending Channel Under Pressure
From a technical standpoint, gold is currently hovering near the lower boundary of an ascending parallel channel, suggesting that the broader trend structure is still technically intact but increasingly vulnerable.
The Relative Strength Index (RSI) is positioned around 39, indicating weakening momentum. While not yet in oversold territory, the indicator reflects a clear shift toward bearish control, with buyers losing conviction on each rebound attempt.
Meanwhile, the MACD (Moving Average Convergence Divergence) remains firmly in negative territory, confirming that downward momentum dominates the near-term structure. The lack of bullish crossover signals suggests that any recovery attempts are likely to face strong overhead resistance.
Key technical levels to monitor include immediate support at $4,691 (channel base) and a critical breakdown level, where a sustained break below $4,691 could trigger accelerated selling pressure. The next downside target is $4,568, which aligns with a prior structural support zone. On the upside, key resistance is located at $4,926, representing both channel resistance and a trend continuation trigger.
A decisive break below the ascending channel support would represent a significant technical deterioration, potentially shifting the market into a deeper corrective phase. Conversely, only a sustained move above $4,926 would restore confidence in the broader bullish structure and reopen upside continuation scenarios.
Outlook: Bearish Bias Dominates Near-Term Flow
The broader fundamental and technical landscape continues to favor bearish traders in the near term. With USD strength, reduced Fed easing expectations, and persistent geopolitical volatility that paradoxically supports the dollar, gold remains under structural pressure.
While the metal has not yet confirmed a full breakdown, the combination of weak momentum indicators, failed upside attempts, and proximity to key support suggests that risks are skewed to the downside.
Unless geopolitical conditions shift in a way that weakens the USD or central bank expectations turn more dovish, the path of least resistance for gold appears tilted toward further losses below the $4,700 threshold, with traders closely watching whether the ascending channel support can withstand sustained selling pressure.
