04.05.202619:10 Forex Analysis & Reviews: XAU/USD: Price Analysis and Forecast – Gold Prices Decline

Gold (XAU/USD) continues to show intraday decline, falling below the $4,550 level. Investors have begun to view energy shocks caused by geopolitical instability in the Middle East as factors that could revive inflationary pressure and force major central banks, including the U.S. Federal Reserve, to adopt a more hawkish stance. This is having a significant negative impact on demand for the precious metal.

U.S. President Donald Trump announced the initiation of an operation to escort vessels blocked in the Persian Gulf through the Strait of Hormuz as part of a project called "Project Freedom." He also warned that decisive measures would be taken if the operation fails. In turn, a leading Iranian parliamentarian, Ibrahim Azizi, stated that any U.S. intervention in this strategically important route would be considered a violation of the ceasefire. Moreover, the Islamic Revolutionary Guard Corps (IRGC) accused the United States of breaching agreements and indicated a possible resumption of conflict. This casts doubt on diplomatic efforts to end the conflict amid a lack of progress in peace talks between Washington and Tehran and keeps oil prices elevated.

This situation coincides with the release of U.S. macroeconomic data on Thursday, which showed an acceleration in inflation in March and reinforced expectations that the Federal Reserve may keep interest rates unchanged throughout the next year. The central bank's decision to maintain the key interest rate in the 3.50%–3.75% range became the most controversial since 1992, with three committee members voting against the dovish stance. Additionally, on Sunday, Minneapolis Federal Reserve President Neel Kashkari stated that a prolonged conflict with Iran increases inflation risks and economic damage, allowing for the possibility of rate hikes amid uncertainty surrounding the war.

Hawkish rhetoric is supporting demand for the U.S. dollar following a minor bearish correction earlier in the week, which is seen as another factor putting pressure on gold prices.

At the same time, bears trading XAU/USD should act cautiously—an excess of selling is limiting further downside. Investors are closely awaiting key U.S. macroeconomic data scheduled for early in the month, including the quarterly Nonfarm Payrolls (NFP) report on Friday, which could significantly impact market conditions. However, the current fundamental backdrop suggests that the primary direction for the precious metal remains downward.

From a technical perspective, oscillators are negative. If gold fails to hold above $4,500, it may accelerate its decline toward the 200-day EMA. Bulls need to break above the 20-day SMA to gain a chance for further growth.