- Gold attempts a rebound from weekly lows near $3,360 during thin Thursday trading.
- Renewed safe-haven demand for the US Dollar follows reports of potential US military action against Iran.
- Despite breaching the $3,377 support after the Fed’s hawkish pause, Gold’s daily RSI remains bullish.
Gold prices are seeing fresh buying interest near the weekly low of $3,363 early Thursday, as geopolitical tensions in the Middle East overshadow the US Federal Reserve’s hawkish monetary policy stance.
Rebound in Focus: Is It Sustainable?
Investor risk appetite took a hit during Asian trading hours after multiple reports suggested that the US is weighing military strikes on Iran—possibly as early as this weekend. President Joe Biden is said to be considering an attack on Iran’s heavily fortified Fordow nuclear facility, further escalating concerns of a broader regional conflict.
This development follows a stern warning from Iran’s Supreme Leader Ayatollah Ali Khamenei, who on Wednesday vowed that any American military involvement would inflict “irreparable damage” on the US, rejecting any notion of surrender.
Amid these rising geopolitical tensions, demand for safe-haven assets like gold has picked up. However, the US Dollar—another traditional haven—is also in demand, making it more difficult for gold buyers to gain momentum.
The greenback is extending its recent strength, buoyed by the Fed’s policy announcement. The central bank held rates steady between 4.25% and 4.5%, in line with expectations, and maintained its forecast for two rate cuts in 2025. However, it dialed back expectations for further easing in 2026 and 2027, while revising its inflation outlook higher and cutting growth projections.
Markets interpreted the Fed’s decision and commentary as moderately hawkish, adding pressure on gold, which offers no yield.
Key Levels and Technical Outlook
Following the Fed’s announcement, gold slipped below the key support level at $3,377 and closed beneath it on Wednesday. However, thin liquidity conditions due to the Juneteenth holiday in the US could lead to exaggerated price movements in the near term.
From a technical standpoint, gold still maintains a bullish bias. The 14-day Relative Strength Index (RSI) remains above the neutral 50 level, currently around 55. For bulls to regain control, gold must reclaim the $3,377 level, which also coincides with the 23.6% Fibonacci retracement of April’s record rally.
If successful, the next upside targets include the $3,400 round figure, followed by resistance at $3,440. A breakout above that level could pave the way toward the two-month high near $3,453.
On the downside, if the rebound falters, immediate support lies at the 21-day Simple Moving Average (SMA) near $3,348. A further decline could expose the 50-day SMA at $3,308.
Bottom Line
While gold remains underpinned by growing geopolitical concerns, buyers must contend with a resurgent US Dollar and a more hawkish Fed outlook. All eyes will remain on Middle East developments for fresh cues, with any escalation likely to fuel further safe-haven demand for the yellow metal.