During the Asian trading session on Friday, gold prices continued their weak performance, trading below $4700 and hovering near the two-week low reached in the previous session. On a weekly basis, gold is poised to end a multi-week winning streak, indicating a potential shift in market structure.
The primary market driver remains uncertainty surrounding the Middle East situation. Tensions around the Strait of Hormuz continue to escalate, with the US imposing a maritime blockade on Iranian ports, while Iran has issued strong responses to related actions, intensifying disagreements between the parties. Rising shipping security risks have significantly increased market concerns about a further escalation of conflict. This uncertainty has strengthened the US dollar's safe-haven appeal.
Concurrently, disruptions to energy supplies continue to push oil prices higher, subsequently fueling inflation expectations. The market widely believes that rising oil prices will increase global inflation through cost transmission, thereby limiting the room for major central banks to pivot to accommodative policies. Current market pricing suggests the Federal Reserve may only implement one 25-basis-point interest rate cut in 2026, an expectation that has significantly diminished gold's attractiveness.
Regarding interest rates and yields, US Treasury yields have risen against the backdrop of increasing inflation expectations, further enhancing the appeal of US dollar-denominated assets. As gold does not generate interest income, its carrying cost increases in a high-interest-rate environment, prompting capital to flow towards higher-yielding assets. This has become a significant factor pressuring gold prices. Therefore, although geopolitical risks typically benefit gold, inflation and interest rate expectations have become the dominant variables in the current environment.
From a market sentiment perspective, investors are shifting from a "safe-haven driven" mindset to an "interest rate driven" one, partially weakening gold's traditional role as a safe-haven asset. Meanwhile, the US dollar remains strong, supported by both its safe-haven status and interest rate advantages, exerting sustained pressure on gold prices.
Technically, on the daily chart, gold has broken below the support of a key upward channel, indicating a disruption of the bullish structure and a shift to a bearish short-term trend. The price is currently trading below its major moving averages, further confirming the weak pattern. Key support below is located at $4650; a break below this level could lead to a further test of the $4600 area. Initial resistance above is seen at $4680, followed by the area near the 200-period moving average around $4775. On the 4-hour chart, the price continues to trade within a descending channel. Momentum indicators are bearish, with the RSI approaching oversold territory but not yet showing clear reversal signals. The MACD remains in negative territory, suggesting bearish forces still dominate.
Overall, until there is clear relief in inflation expectations and policy tightening expectations, gold faces further near-term downward pressure, with any rebounds likely to be viewed as temporary corrections.
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