According to the FXStreet website, spot gold,
High energy prices, resulting from supply disruptions in the Middle East, continue to pressure US inflation. The US Producer Price Index rose 6 percent year-on-year in April, compared to 4.3 percent in March, exceeding market expectations of 4.9 percent. The basic index, which excludes food and energy, also rose to 5.2 percent, after it was at 4 percent, which in turn exceeded expectations.
This data came after a stronger than expected consumer price index report, which showed that general inflation rose to 3.8 percent in April, compared to 3.3 percent in March, which is the highest level since May 2023.
These numbers reinforced investors’ conviction that the Fed may not be moving to cut interest rates soon, and some traders are even pricing in the possibility that the US Central Bank’s next step will be a new rate hike. According to the CME FedWatch tool, markets expect the Fed to keep the cost of borrowing unchanged in the coming months, while the odds of raising interest will rise to about 33 percent by December, and to about 41.5 percent by January 2027.
As US Treasury bond yields rose, the attractiveness of gold declined, as it is a non-yielding asset. Therefore, the yellow metal has remained under pressure since the outbreak of the US-Iran war, after its role as a safe haven and a hedge against inflation declined in the face of the strength of the dollar and high interest expectations.
In metal markets, India’s decision to raise duties on gold and silver imports from 6 percent to 15 percent caught attention, after causing a rise in local prices, amid expectations that this would affect actual demand in one of the largest gold markets in the world in the coming months.
Geopolitically, there does not seem to be a solution to the war in the Middle East soon, as peace negotiations between Washington and Tehran are still stuck on the issue of the Iranian nuclear program, while the Strait of Hormuz remains effectively closed.
In parallel, US President Donald Trump is preparing to meet his Chinese counterpart Xi Jinping later this week. Trump had told reporters that he did not need China’s help to end the war with Iran, adding that the United States would win the war “one way or another.”
Technically, gold shows limited movement near the $4,700 level, with a clear weakness in momentum. On the four-hour chart, the price is moving below the 20-period simple average of the Bollinger Band indicator near $4705, which keeps the immediate trend neutral after the recent decline from higher levels.
The Relative Strength Index reading near 51, and the Average Directional Index near 18, indicate the absence of a decisive trend, which reinforces the hypothesis of continued trading within a limited range rather than a strong breakthrough.
The first resistance appears near $4706, followed by the $4753 area, then a horizontal barrier at $4850. In the downward direction, the $4,657 level represents initial support, with the $4,500 area remaining a stronger support if sellers recover.
