Gold News: Dollar Surge Pressures Gold Toward 50-Day Moving Average

Gold Heads for Second Straight Weekly Loss as Dollar Surges and Rate Cut Hopes Fade

Spot gold is lower late Friday and appears headed to their second consecutive weekly loss. The pressure is coming today from a surge in the U.S. Dollar Index (DXY) which touched its highest level since May 29.

Inflation fears driven by the U.S.-Iran war and worries that the Fed would push its first rate cut of 2026 into at least September are two of the key factors supporting the dollar and capping gold.

At 20:37 GMT, XAUUSD is trading $5016.01, down $63.24 or -1.25%.

Long-Term Bullish but Short-Term Looks Bearish

The bullish long-term fundamentals remain intact, but the short-term picture looks bearish. Longer-term, the market is reportedly supported by strong central bank buying, designed to weaken the dollar. However, those buyers were counting on a lower interest rate environment.

War Changed Everything

Since late January, gold has been under pressure because of doubts and uncertainty over the next Fed rate cut. This essentially took a January and March rate cut off the table. The market began to price in a June rate cut. Conditions have changed since the war started on February 28.

Oil prices have surged past $100 a barrel over the past two weeks and daily damage reports suggest the war could become a prolonged event, which could cause higher inflation and slower growth. This could also create major problems for the Fed because they are mandated to keep consumer inflation at 2% or lower. Slower growth in the labor market would mean a Fed rate cut, but with inflation high, the Fed can’t cut. They don’t want to raise rates so they do the next best thing. They delay rate cuts and push them into the future.

Short Dollar and Long Gold Positions Are Unwinding

U.S. Dollar traders were betting that two or three rate cuts in 2026 would weaken the greenback. Bullish gold investors were buying the dollar-denominated asset for these two reasons. Now that it looks as if the Fed will delay a rate cut until September, traders are covering their short dollar positions and long gold positions are trimming positions. This is where we are at today.

Crude Oil Is the Root Cause

I believe the cause of all of this is soaring crude oil prices. Until the war ends and the Strait of Hormuz is reopened to oil tanker traffic, prices are expected to remain elevated. Conditions could worsen and gold could plunge lower if crude oil has a sustained move over $100 per barrel.

Secondary Lower Top Signals Possible Major Top Forming

Technically, the short-term trend is up according to the daily swing chart and the 50-day moving average. However, the formation of the secondary lower top at $5419.66 on March 2 indicates a major top could be forming. Taking out the swing bottom at $4996.27 will shift momentum and change the trend to down.

50-Day Moving Average Is the Line in the Sand

Gold traders will also be eyeing the 50-day moving average at $4944.15. This trend indicator held as support for a year until it was briefly broken on February 2, falling to $4402.38 before the recovery rally to $5419.66.

If the 50-day moving average fails to hold then don’t be surprised if XAUUSD drops sharply into the retracement zone at $4744.34 to $4541.88.

More Information in our Economic Calendar.