Gold Forecast: XAU/USD sellers refuse to give up yet as US CPI, US-Iran peace talks loom
Gold remains at a crossroads in Friday’s Asian trades, trying to find a clear direction as markets remain cautiously optimistic ahead of the US inflation report and the US-Iran peace negotiations.
Gold braces for a big day ahead
Gold buyers cheer the optimism heading into the peace talks between the United States (US) and Iran in Pakistan later on Friday, which is keeping the downside cushioned in the bullion.
However, sellers refuse to give up yet, as markets anticipate a surge in the US Consumer Price Index (CPI) for March, as the war impact on energy prices will likely be reflected, completely reshaping expectations around the US Federal Reserve’s (Fed) interest rate outlook.
The FOMC Minutes on Wednesday showed that the policymakers still expect the Fed to resume cutting rates later this year.
If the data suggests any hints of a potential hawkish Fed pivot, the non-yielding Gold could come under intense selling pressure.
On the other hand, if markets ignore higher inflation readings as a one-off amid the Middle East crisis, that could downplay inflation concerns and retain bets for a Fed rate cut this year. This scenario could be the breakout trigger for Gold buyers.
That being said, any reaction to the US inflation data could be limited or countered by the sentiment surrounding the US-Iran peace talks and its likely outcome.
In the meantime, a lack of de-escalation in the Israel-Lebanon conflict keeps investors on edge and the haven bid for the US Dollar (USD) intact.
Israeli Prime Minister Benjamin Netanyahu said that there is “no ceasefire in Lebanon” and Israel would continue “to strike Hezbollah with full force” as the country’s military launched fresh strikes.
His remarks came after US President Donald Trump asked Netanyahu to be “more low-key” in Lebanon.
Hence, Gold continues to trade with caution early Friday, with traders refraining from placing fresh directional bets.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,742.85, holding a neutral near‑term bias as spot consolidates between short- and medium-term trend signals. Price remains above the 21-day simple moving average (SMA) at $4,692.08 and the 100-day SMA at $4,680.72, which together suggest underlying demand on dips, while staying capped beneath the 50-day SMA at $4,901.95 that limits topside follow-through. The 200-day SMA at $4,178.71 continues to underpin the broader bullish structure, and the Relative Strength Index (14) hovering around 49.2 reflects balanced momentum with neither buyers nor sellers in clear control.
However, risks appear in favor of the downside as the 21-day SMA is looking to cross the 100-day SMA from above. If that is materialized on a daily closing basis, it will confirm the bearish bias.
On the downside, initial support is seen at the 21-day SMA near $4,692, followed closely by the 100-day SMA at roughly $4,681, forming a nearby demand band that, if broken, would expose the deeper medium-term floor around the 200-day SMA at $4,179. On the topside, immediate resistance comes at the 50-day SMA around $4,902; a daily close above this barrier would be needed to revive bullish traction and open the way for a more sustained recovery phase.
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
