Forex News

• Gold heads for a third straight weekly loss as higher-for-longer Fed expectations weigh on sentiment.
• Traders price in a 70% chance of a September Fed rate hike following this week's hawkish FOMC meeting.
• Technically, XAU/USD remains below the Bollinger SMA middle band, while the RSI points to sustained bearish momentum.

Gold (XAU/USD) remains under pressure on Friday as traders assess the latest news about the US-Iran peace deal and the Federal Reserve's (Fed) hawkish monetary policy announcement. At the time of writing, XAU/USD trades around $4,157 after hitting a one-week low of $4,121 earlier in the day.

Gold is down nearly 25% from its all-time high after the US-Iran war led traders to price out Fed rate-cut bets for this year, while the Fed's hawkish tilt further reinforced expectations that interest rates could remain higher for longer.

Traders now see a 70% chance that the US central bank could raise rates as soon as September, according to the CME FedWatch Tool.  As a non-yielding asset, Gold tends to struggle in a high-interest-rate environment, as investors favor yield-bearing assets such as bonds.

The shift toward tighter monetary policy comes after nearly half of FOMC members signaled at least one rate increase by year-end at the June meeting this week.

The increasingly hawkish stance reflects a deteriorating inflation outlook, driven in part by the recent surge in Oil prices, which pushed annual inflation to 4.2% in May, well above the Fed's 2% target. Newly appointed Fed Chair Kevin Warsh reiterated that the central bank remains committed to bringing inflation back down to 2%.

Weak physical demand is adding to Gold's woes. According to sources cited by Indian media outlets, Gold imports into India, one of the world's largest bullion consumers, have fallen nearly 70% since the government raised import duties to 15% from 6% last month. However, Gold's longer-term outlook remains underpinned by steady central bank buying.

On the geopolitical front, the 60-day Memorandum of Understanding (MoU) between the United States and Iran has improved market sentiment, though uncertainty remains. The White House said US Vice President JD Vance had delayed a planned trip to Switzerland, where he was expected to lead a new round of talks with Iran this Friday. Meanwhile, clashes between Israel and Hezbollah continue, casting doubt on hopes for lasting peace in the Middle East.

Technical analysis: XAU/USD remains under pressure below the Bollinger mid-band

On the daily chart, XAU/USD extends its corrective slide below the Bollinger Simple Moving Average (SMA) middle band at $4,357. The metal holds closer to the lower half of the Bollinger envelope, while the Relative Strength Index (RSI) around 35 leans toward bearish momentum, and the Average Directional Index (ADX) in the mid‑30s suggests a strengthening downtrend bias.

On the topside, initial resistance emerges at the Bollinger SMA middle band near $4,356, with the upper Bollinger band coming in higher around $4,636 as a more distant cap if a rebound accelerates. On the downside, immediate support is seen near the recent base around $4,150, followed by the lower Bollinger band near $4,077, where sellers could hesitate before considering a deeper extension of the current pullback.

(The technical analysis of this story was written with the help of an AI tool.)

UOB Global Economics & Markets Research reports that GBP/USD fell sharply after the Bank of England left rates unchanged at 3.75%, before trimming losses to trade near 1.3236. The BOE decision saw a 7–2 vote, with two members preferring a hike to 4.00%. UK labour data showed slightly lower unemployment and still-firm wage growth, complicating the policy outlook.

Sterling soft after split BoE decision

"The Bank of England (BOE) held the Bank rate unchanged at 3.75% on Thu, as policymakers continue to balance the need to address above-target inflation with lackluster economic growth. The decision to hold was backed by seven of the nine Monetary Policy Committee (MPC) members at the May meeting. BOE chief economist Huw Pill and Megan Greene, an external member of the rates-setting MPC, were the two dissenting voices, casting votes to hike the BOE’s “base rate” by 25 bps to 4.00%."

"The US dollar extended gains on Thu to its highest in more than a year after a hawkish hold from the Fed triggered bets on rate hikes. The US dollar index (DXY) surged and closed at a one-year high at 100.85 (+0.76%). EUR/USD extended its sharp decline from the previous session to close at 1.1456 (-0.37%). GBP/USD plummeted by 0.69% to 1.3205 following the BOE’s decision, before paring losses to trade around 1.3236."

"The UK’s unemployment rate edged lower to 4.9% in the three months to Apr, from 5.0% in Mar. Wage growth remains relatively firm, with regular pay rising 3.4% y/y, above expectations; and total pay closer to 4.4% y/y."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

DBS Group Research strategist Chang Wei Liang notes that USD/JPY has broken above 161, returning to levels that previously triggered official action. He highlights that speculative Japanese Yen shorts remain elevated despite the recent BOJ rate hike, and argues that Japan’s tolerance for further Yen weakness is nearly exhausted, raising the likelihood of renewed intervention and stronger rhetoric from authorities.

Authorities eye renewed Yen intervention risk

"USD/JPY has broken above 161, reaching levels that previously triggered market interventions."

"While this rebound is broadly consistent with USD strength following the FOMC, it also highlights that large speculative JPY short positions have not eased despite the BOJ’s rate hike this week."

"Japan’s tolerance for JPY weakness appears close to its limit, given that authorities intervened to sell USD/JPY to the tune of USD73bn in late April-May."

"Policymakers may deploy both rhetoric and further market interventions to curb JPY depreciation, with falling oil prices also offering some support to the currency."

"Brent prices have now declined to around USD76, which should temper inflationary pressures and support oil-sensitive Asian currencies."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

UOB Global Economics & Markets Research notes that the US Dollar extended gains after the Fed’s hawkish hold, pushing USD/JPY sharply higher to 161.37. The pair is now trading near levels that previously triggered Japanese authorities’ intervention. The report highlights that markets are closely watching for potential yen-support operations as higher US yields and a stronger Dollar continue to pressure the Japanese Yen.

Yen pressured near prior intervention zone

"The US dollar extended gains on Thu to its highest in more than a year after a hawkish hold from the Fed triggered bets on rate hikes."

"USD/JPY rose sharply and closed at 161.37 (+0.46%). Markets are reportedly on watch for yen intervention after the Fed’s hawkish stance triggered a drop in the currency to levels that have previously prompted Japan’s finance ministry to step in."

"Risk sentiment improved modestly on Thu as markets continued to digest the Fed’s hawkish tilt alongside resilient US data. Firm labour and spending signals reinforced the higher-for-longer narrative, keeping front-end yields elevated and the US dollar supported."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Brown Brothers Harriman’s Elias Haddad notes that foreign investors sharply increased purchases of long-term US securities in April, with inflows over the past year more than offsetting the US trade deficit. He highlights that US-G6 yield differentials and US economic outperformance support the Dollar, suggesting the DXY can trade higher from current levels.

Yield spreads and inflows back Dollar

"Still, the dollar index (DXY) can edge higher. US-G6 two-year bond yields are consistent with DXY trading closer to 102.00 and US economic outperformance should keep rate differentials supportive of the dollar."

"Moreover, underlying demand for USD remains strong. The US Treasury International Capital (TIC) data showed net foreign purchases of long-term US securities (treasury bonds & notes, corporate bonds, equities, gov’t agency bonds) increased by $206bn in April (the most since November 2025) vs. $96bn in March."

"As a result, in the twelve months to April, foreign investors accumulated a record $1825bn of long-term US securities, eclipsing the -$719bn accumulated US trade deficit over the same period."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

UOB Global Economics & Markets Research notes that USD/SGD closed at 1.2900, with the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) estimated at 1.75% above its mid-point. The team expects the NEER to stay in a 1.50%–2.00% band above the mid-point in the current session, implying a projected USD/SGD trading range between 1.2872 and 1.2937 as the US Dollar remains broadly supported.

SGD NEER suggests tight intraday range

"Asian currencies were mixed on Thu. USD/IDR fell to 17,710 (-0.16%) as Bank Indonesia (BI) delivered another 25bps hike, providing some support. USD/INR fell to 94.53 (-0.28%), while USD/KRW rose 1.50% to 1,539.30. Similarly, MYR underperformed within the region, closing down 1.3% to 4.1170 against the USD. USD/SGD closed at 1.2900 (+0.15%)"

"The SGD NEER index on our model closed the day at 1.75% above the mid-point and it is likely to remain between 1.50% and 2.00% above the mid-point for today's session. This implies a USD/SGD range of between 1.2872 and 1.2937."

"Risk sentiment improved modestly on Thu as markets continued to digest the Fed’s hawkish tilt alongside resilient US data. Firm labour and spending signals reinforced the higher-for-longer narrative, keeping front-end yields elevated and the US dollar supported."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Gold hits one-week lows at the $4120 area, on track for a 1.7% weekly drop.
• Rising bets of Fed monetary tightening in 2026 are weighing on precious metals.
• The technical picture shows bears in control, with the YTD low at $4,023 at hand.

Gold (XAU/USD) extends losses for the third consecutive day on Friday, hitting one-week lows at $4,121, on track to close a three-week losing streak. The precious metal struggles, despite a somewhat softer US Dollar, as rising bets of Federal Reserve (Fed) rate hikes are acting as a headwind for Gold rallies.

The Fed left interest rates steady on Wednesday, but the monetary policy statement noted solid economic activity and an improvement in the labour market. The interest rate projections showed that nearly half of the bank’s policymakers see at least a rate hike in 2026, and the new Chairman, Kevin Warsh, dissipated doubts about his dovishness, with a clear commitment to bring inflation back to the 2% target.

Futures markets are now pricing a 77% chance of a Fed rate hike at October’s monetary policy meeting, up from less than 40% last week, while the odds for at least a quarter-point tightening before the year-end are priced at 90%. The USD has lost some steam on Friday, with markets at half throttle amid the Juneteenth bank holiday in the US, but these hopes are likely to keep Dollar bears subdued and weigh on Gold recoveries.

Technical Analysis: Bears eye 2026 low at $4,023

XAU/USD trades at $4,147.83, keeping a bearish near-term tone with the daily chart showing a sequence of lower highs and lower lows. The Relative Strength Index (RSI) in the mentioned timeframe remains capped well below the 50 line, while the Moving Average Convergence Divergence (MACD) holds below zero at -7.15, both suggesting lingering downside pressure.

Bears have remained contained above $4,100 so far, but upside attempts are weak, which might convince sellers to retest the year-to-date low of $4,023 (June 11 low). Further down, the late October 2025 low, near $3,885, emerges as the next target.

On the topside, the confluence between the descending trendline from March highs and the weekly top, around $4,370, is likely to pose significant resistance. If that level gives way, the next target is the late May-early June highs at the $4,585 area.

(The technical analysis of this story was written with the help of an AI tool.)