Gold sees more pain as Iran tensions revive inflation fears

• Gold price weakens to $4,056 as revived global inflation fears force traders to reconsider Fed interest rate expectations.
• Gold technical analysisXAU/USD trades lower at around $4,056, keeping a bearish near-term bias as spot holds under the 20-day exponential moving average (EMA) at $4,149.09.

Gold price (XAU/USD) reflects signs of softness on Thursday, trading 0.5% lower at around $4,056 during the Asian trading session. The precious metal is under pressure as Middle East hostilities have revived fears of high global inflation, a scenario that discourages major central banks from easing monetary conditions. This framework bodes well for interest-bearing assets, but diminishes the appeal of non-yielding assets, such as Gold.

Traders seem to have started pricing in fears of high inflation, as the CME FedWatch tool shows that the odds of the Federal Reserve (Fed) leave interest rates unchanged this year have eased to 14.9% from 19.4% recorded on Tuesday.

On Wednesday, the United States (US) Central Command said that it launched fresh strikes on Iran, which were aimed to keep the Strait of Hormuz, a critical chokepoint to almost 20% of global energy supply, open for transit. This came after US President Donald Trump announced that the memorandum of understanding (MoU) signed with Iran, aimed at ending the Middle East war, is over.

The Federal Open Market Committee (FOMC) Minutes of the June policy meeting, released on Wednesday, showed that policymakers continue to see “inflation as the dominant risk”, and several officials still believe further tightening could become necessary.

XAU/USD trades lower at around $4,056, keeping a bearish near-term bias as spot holds under the 20-day exponential moving average (EMA) at $4,149.09. The metal continues to trade below this key dynamic barrier, suggesting upside attempts remain capped, while the Relative Strength Index (RSI) at 40.11 stays in mildly negative territory and hints at persistent, though not extreme, selling pressure.

On the topside, immediate resistance is defined by the 20-day EMA at $4,149.09, and a sustained break above this level would be needed to ease the current downside tone. The precious metal could advance towards $4,200 if it manages to sustain above the moving average. Looking down, the yellow metal could slide towards $3,800 if it breaks below the June 30 low of $3,941.76.