Spot gold prices are facing renewed adjustment pressure amid ongoing volatility in global financial markets. Although an attempt was made on Thursday to challenge the significant psychological barrier of $4,800, the effort ultimately failed, attracting a fresh wave of selling interest. During Asian trading hours on Friday, the price of gold declined to near $4,738. Currently, spot gold is trading around $4,755 per ounce, down approximately 0.2%. Despite this minor pullback, the precious metal continues to trade within a familiar range as market participants await the latest US Consumer Price Index (CPI) data for clearer directional cues.
The failure to sustain a break above $4,800 on Thursday prompted a noticeable shift in market sentiment, with new selling pressure emerging and pushing prices lower. This reflects a weakening of short-term holding interest in gold amid current uncertainties. Nevertheless, the price action remains confined to a recent consolidation range, indicating a lack of clear directional momentum. Traders widely believe that a more decisive breakout signal for gold will only emerge following the release of key macroeconomic data. Current price levels suggest a relative equilibrium, characterized by cautious balance rather than sharp declines or strong upward momentum.
The upcoming US CPI report for March is highly anticipated. Market expectations suggest that the recent surge in crude oil prices, driven by Middle East tensions, could lead to further inflationary pressures. Such potential upward pressure on inflation would likely reduce the possibility of the Federal Reserve cutting interest rates in the near term. The minutes from the March FOMC meeting, released earlier this week, indicated that Fed officials are adopting a cautious stance toward inflation risks stemming from energy price shocks and show no urgency to ease monetary policy. This hawkish signal reinforces expectations that the Fed will maintain higher interest rates, which in turn weighs on non-yielding assets like gold.
Tensions surrounding the Strait of Hormuz, a critical chokepoint for global oil shipments, are a major focus for markets. Iran has announced a suspension of shipping activities through the strait following Israeli strikes on Lebanon. Concurrently, former US President Donald Trump criticized Iran's handling of oil transit and warned that the US would resume strikes if related agreements collapse, escalating concerns about regional instability. These geopolitical risks are providing support for oil prices, boosting global inflation expectations, and reinforcing the Fed's hawkish stance, thereby pressuring gold prices. However, the absence of sustained follow-through selling has prevented a sharp unilateral decline, suggesting short sellers should remain cautious.
On the diplomatic front, Israeli Prime Minister Benjamin Netanyahu has stated that direct negotiations with Lebanon will commence shortly to address key disputes within the fragile US-Iran ceasefire framework. Reports confirm that Lebanon-Israel talks are scheduled for next week in Washington, D.C., with critical US-Iran negotiations expected to proceed from Friday evening into Saturday. These diplomatic efforts sustain hopes for regional stability, which may limit further US dollar strength and provide underlying support for gold, helping to cap deeper losses.
From a technical perspective, spot gold exhibits a neutral-to-bearish bias on the 4-hour chart. Prices are facing resistance near the 200-period Simple Moving Average, which coincides with the 61.8% Fibonacci retracement level of the March decline, creating a significant resistance zone around $4,890-$4,915. The Relative Strength Index is near 55, indicating modest buying interest, but the Moving Average Convergence Divergence has dipped slightly into negative territory, suggesting weakening upward momentum. A clear break above $4,915 could open the path toward $5,131.50 and then $5,419. On the downside, initial support lies near $4,750, with more critical support at $4,732. A break below this level could target $4,595 and $4,401, with deeper structural support near $4,100.
In summary, the slight retreat in gold prices is primarily influenced by inflation concerns stemming from Middle East tensions and hawkish Fed expectations. The upcoming US CPI data will be a key short-term catalyst. While bearish forces hold a technical advantage, diplomatic negotiation prospects and a lack of persistent selling pressure are limiting the downside. Investors should closely monitor incoming inflation data and developments in the Middle East to gauge gold's next move. Amid intersecting global uncertainties, gold's role as a safe-haven asset persists, but prices are likely to continue fluctuating within a range until clearer macroeconomic or geopolitical signals emerge.
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