Gold (XAU/USD) edged up from the day’s low but stayed under a two-week high in early European trade, as the US Dollar drew safe-haven demand linked to renewed tension around the Strait of Hormuz. Iran is seeking tighter control of the waterway and, according to its ambassador to China, plans to introduce new service fees for ships; the US has rejected the proposal. At the same time, expectations for further Federal Reserve rate rises eased after soft US monthly employment data last Thursday and weaker inflation pressure from a slump in crude oil prices, which has tempered support for the Dollar and helped limit bullion’s pullback. Demand from central banks also remained a stabilising factor: a World Gold Council survey found almost 90% of respondents expect global central bank gold reserves to rise over the next year, the European Central Bank reported gold has overtaken US Treasuries in global reserve allocations, and the People’s Bank of China bought 320,000 ounces in May for a 19th consecutive monthly increase.
Market focus next turns to ISM Services PMI and speeches from FOMC officials. Technically, Friday’s move above the 100-period SMA on the four-hour chart and beyond the 23.6% Fibonacci retracement of the April–June fall kept momentum firm, with RSI near 63 and MACD positive. Support sits around $4,164 and the 100-period SMA near $4,147, with a deeper break pointing to $3,940, while resistance levels are seen at $4,302, $4,415, $4,527, $4,686 and $4,889.
Fundamental Drivers and Central Bank Demand
We are seeing gold consolidate after touching a two-week high earlier this week, currently trading around $2,455 per ounce. The US Dollar is showing some strength amid ongoing trade negotiations between the US and the Pan-Asian trading bloc, which is putting some pressure on the metal. However, this dollar strength may be temporary, as the broader economic picture suggests a different story.
Traders are scaling back bets on any further Federal Reserve rate hikes for the remainder of 2026. The latest Non-Farm Payrolls report for June 2026 showed job growth slowing to 195,000, just missing expectations, while the most recent CPI data pegged inflation at a stubborn but manageable 2.8%. This environment likely gives the Fed room to remain patient, capping the US Dollar’s upside and providing a tailwind for non-yielding gold.
Underneath the daily price movements, a strong floor of support is being built by global central banks. The World Gold Council’s Q2 2026 report confirmed that central banks remained net purchasers for the fifth straight quarter, adding over 210 tonnes to global reserves. This consistent buying, particularly from emerging market banks, should limit any significant corrective dips in the gold price over the coming weeks.
Technical Outlook and Key Levels
From a technical standpoint, the intraday pullback appears to be a buying opportunity, as the path of least resistance remains to the upside. Gold is finding solid support near its 50-day moving average around the $2,420 level, with the Relative Strength Index holding firmly above 50. We will be watching for a sustained break above the recent high of $2,485, which would open the door to a test of the psychological $2,500 mark.
