Gold bulls turn more cautious

XAU/USD

Key zone: 3,900.00 - 4,100.00

Buy: 4,150.00 (on a confirmed breakout at 4.080); target 4,350-4,500; StopLoss 4,050.00

Sell: 3,850.00 (on strong negative fundamentals); target 3,650-3,500; StopLoss 3,950.00

The recovery of the U.S. dollar is limiting gold's upside potential, keeping the precious metal on track for its second consecutive weekly decline. The conflict in the Middle East has overshadowed weaker-than-expected U.S. inflation data for June. Inflationary pressures are building again, and markets are once more searching for reasons to justify higher U.S. interest rates.

Reminder:

Spot gold rose 0.8% to $4,002.50 per ounce, while U.S. August gold futures gained 0.4%. Despite Friday's rebound, gold has declined 3% since the beginning of the week, marking its steepest weekly drop since June 1.

• U.S. Central Command (CENTCOM) announced late Thursday that it had completed a sixth consecutive night of strikes against Iran. According to CENTCOM, the operations were aimed at further degrading Iran's military capabilities and "holding Iran accountable" for attacks on commercial shipping.
• Bullion prices fell sharply on Thursday after tensions escalated when U.S. President Donald Trump threatened strikes against civilian infrastructure, including power plants and bridges. In response, Tehran announced the closure of the Bab el-Mandeb Strait, a move that would further disrupt global oil shipments and push the world economy closer to recession.
• Renewed disruptions in the Strait of Hormuz are driving oil prices higher, reviving inflation concerns and intensifying discussions over future Federal Reserve policy. Since gold does not generate yield, it typically struggles in a high-interest-rate environment as investors shift toward higher-yielding assets.

According to the CME FedWatch Tool, markets are currently pricing in approximately a 73% probability that the Federal Reserve will raise interest rates by December.

The longer disruptions in key shipping routes persist, the greater the upside risks for energy prices and inflation—two factors that generally weigh on gold.

What does this mean?

The factors above continue to favor U.S. dollar bulls, suggesting that any further rebound in gold prices is likely to attract fresh selling pressure and could quickly be absorbed by pending sell orders.

At the time of writing, the psychological $4,000 level continues to provide support for buyers, preventing a deeper decline while also acting as the gateway toward trendline resistance at $4,075 and the mid-July highs near $4,100. A decisive breakout above these levels would be required to ease bearish pressure and shift market focus toward the July peak around $4,200.

On the downside, this year's low at $3,930 remains the nearest support level. If it is broken, the next downside target is the October 2025 low at $3,880, followed by the 127.2% Fibonacci extension of the late-June decline, located near $3,800.

So we act wisely and avoid unnecessary risks.

Profits to y’all!