Forex News
- Gold steadies above $4,000 amid softer US Dollar, easing Treasury yields after US PCE inflation data.
- Softer-than-expected monthly inflation data cools near-term Fed rate-hike expectations.
- Technically, XAU/USD maintains a bearish bias as prices remain below the middle Bollinger Band.
Gold (XAU/USD) holds above the $4,000 mark on Friday as the US Dollar (USD) softens following the latest US Personal Consumption Expenditures (PCE) inflation report, which broadly met forecasts and reduced expectations of a near-term Federal Reserve (Fed) interest rate hike.
At the time of writing, XAU/USD trades around $4,065 after hitting a seven-month low of $3,959 earlier this week.
Data released on Thursday showed the headline PCE rose 0.4% MoM in May, unchanged from April but below the 0.5% forecast. Core PCE held steady at 0.3%, matching expectations.
Following the data, traders trimmed bets on a September rate hike, with the probability falling to 61% from 70% a week ago, according to the CME FedWatch Tool.
While the softer monthly readings helped ease immediate rate-hike concerns, the annual inflation figures remained well above the Fed's 2% target, suggesting policymakers are likely to keep borrowing costs elevated for longer, even as lower Oil prices are expected to help cool inflationary pressure in the coming months.
Against this backdrop, Gold may struggle to stage a meaningful recovery and remains on track for a fourth consecutive monthly decline, pressured by a broadly stronger US Dollar, Fed rate-hike bets and liquidity-driven selling during the US-Iran war.
"Gold is showing tentative signs of stabilisation after the sharp decline, but a durable rebound still requires a friendlier rates backdrop. As long as markets continue to price a meaningful risk of Fed tightening, rallies may remain prone to fading. For Gold to regain more durable upside traction, real yields need to ease more clearly, Fed hike expectations need to unwind, and ETF/investor liquidation needs to stabilise," OCBC's FX strategists said.
Meanwhile, the US Dollar is set to post a second consecutive monthly gain, making Gold more expensive for overseas buyers. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 101.12 after hitting a more than one-year high near 101.80 earlier this week.
On the geopolitical front, uncertainty over a final US-Iran agreement keeps traders cautious. Iran said on Friday that the US military presence in the Gulf is fueling insecurity and division in the region. Tehran also reiterated that safe passage through the Strait of Hormuz must be coordinated with Iranian authorities.
Technical Analysis: ADX signals a strong downtrend as XAU/USD clings to $4,000
In the daily chart, XAU/USD maintains a bearish near-term bias as price holds below the 20-period Bollinger Simple Moving Average (SMA) at $4,248.
The Relative Strength Index (RSI) at 35 hovers just above oversold territory, while the Average Directional Index (ADX) at 41 signals a strong, persistent downtrend, suggesting that any bounces are likely to be capped by nearby overhead levels.
On the topside, initial resistance is located at the Bollinger middle band near $4,248, with a stronger barrier at the upper band around $4,543.
On the downside, immediate support is seen around the horizontal level at $4,000, ahead of the Bollinger lower band at $3,953, where sellers could pause before attempting another leg lower.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Commerzbank’s Bernd Weidensteiner argues that despite market expectations for further Fed tightening, falling Oil and gasoline prices should lower U.S. inflation and ease pressure for hikes. The bank forecasts no rate increases, with cuts possible from summer 2027, and expects the Dollar to come under renewed pressure once the Iran conflict ends and pronounced easing begins.
No hikes, cuts penciled in for 2027
"Consumer prices are therefore likely to be even lower in June than in May. Significantly declining inflation rates in the coming months would reduce the pressure to deliver rate hikes."
"We continue to expect that the Fed will not raise interest rates. In the summer of 2027, with inflation then significantly lower, interest rate cuts may even be possible again, even though this is no longer being discussed at all in the markets."
"The dollar is likely to be under pressure again after the end of the war with Iran because the Fed is unlikely to raise rates as markets have priced in."
"Rather, the Fed is likely to embark on pronounced and ultimately excessive interest rate cuts again in 2027, also because of the political pressure."
"Furthermore, the dollar is vulnerable because it is significantly overvalued based on purchasing power parity."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
OCBC’s FX strategists Sim Moh Siong and Christopher Wong highlight that Brent Oil has dropped sharply on optimism over the reopening of the Strait of Hormuz after a US–Iran deal, but warn markets may be underpricing security risks. They keep their end-2026 Brent forecast at USD80/bbl and expects a gradual drift toward a low USD60 range in 2027–28, with near-term supply disruption risks slowing further declines.
Oil pressured but risk premium lingers
"The reopening of the Strait of Hormuz following the US-Iran deal triggered a sharp drop in oil prices. Brent has fallen more than USD30/bbl since early May and now trades below USD80/bbl."
"Markets appear to be pricing a smooth reopening. Any delay or partial implementation could quickly bring back the security risk premium. "
"We keep our end-2026 Brent forecast at USD80/bbl. Beyond that, we still expect a gradual move toward a low USD60 range in 2027–28."
"Near term, the risk of supply disruption should slow further decline in oil prices from here. Overnight, crude prices edged higher as doubts emerged over the durability of the US-Iran deal. "
"This followed a strike on a cargo ship in the Strait of Hormuz that caused significant damage to its bridge. The Wall Street Journal reported Iran may be responsible, though this remains unconfirmed. The incident underscores lingering fragility and raises fresh questions on how quickly oil flows can normalise."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- NZD/USD stabilizes around 0.5650 after seven consecutive losing days.
- Latest US inflation data weigh on the US Dollar and reduce expectations of a Fed rate hike in July.
- Expectations that the RBNZ will keep rates unchanged in July continue to pressure the NZD.
NZD/USD trades around 0.5650 on Friday, up 0.05% at the time of writing, as the New Zealand Dollar (NZD) remains under pressure despite a weaker US Dollar (USD) following the latest US inflation data.
The US Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) preferred inflation gauge, rose 4.1% YoY in May, matching market expectations. On a monthly basis, the PCE Price Index increased by 0.4%, below the 0.5% consensus forecast, reinforcing expectations that inflationary pressures may have peaked or are close to doing so.
Following the release, investors scaled back expectations for a 25-basis-point Fed rate hike at the July meeting. According to the CME FedWatch tool, the chance of a July hike fell to around 29.9%, down from 38.5% a week ago, putting pressure on the US Dollar.
However, the New Zealand Dollar has struggled to capitalize on the Greenback's weakness. Expectations that the Reserve Bank of New Zealand (RBNZ) will keep its Official Cash Rate unchanged at its July meeting continue to limit the Kiwi's upside potential. ASB Bank has dropped its forecast for a July rate hike and now expects the RBNZ to remain on hold before resuming gradual tightening from September, with the Official Cash Rate projected to peak at 3.25% in early 2027.
Markets also continue to view a September Fed rate hike as a realistic possibility, even though near-term expectations have eased following the PCE release. This divergence in monetary policy expectations between the two central banks could continue to shape NZD/USD price action in the coming days.
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.46% | -0.19% | -0.10% | -0.19% | 0.06% | -0.06% | -0.38% | |
| EUR | 0.46% | 0.26% | 0.37% | 0.30% | 0.53% | 0.37% | 0.09% | |
| GBP | 0.19% | -0.26% | 0.13% | 0.00% | 0.27% | 0.13% | -0.18% | |
| JPY | 0.10% | -0.37% | -0.13% | -0.10% | 0.15% | 0.00% | -0.29% | |
| CAD | 0.19% | -0.30% | -0.01% | 0.10% | 0.25% | 0.10% | -0.21% | |
| AUD | -0.06% | -0.53% | -0.27% | -0.15% | -0.25% | -0.13% | -0.45% | |
| NZD | 0.06% | -0.37% | -0.13% | -0.01% | -0.10% | 0.13% | -0.30% | |
| CHF | 0.38% | -0.09% | 0.18% | 0.29% | 0.21% | 0.45% | 0.30% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
- USD/CHF gives back weekly gains as US PCE data weighs on the US Dollar.
- Softer-than-expected inflation readings temper expectations of an imminent Federal Reserve rate hike.
- IMF backs the SNB's current policy stance while urging flexibility amid heightened uncertainty.
USD/CHF edges lower on Friday, retracing all the gains recorded this week as the US Dollar (USD) rally loses momentum following the latest US Personal Consumption Expenditures (PCE) data, which broadly came in line with expectations and showed that underlying inflationary pressures remain relatively contained.
At the time of writing, the pair trades around 0.8071, extending losses for a second consecutive day after hitting an 11-month high of 0.8139 on Wednesday.
Data released on Thursday showed the headline PCE rose 0.4% MoM in May, unchanged from April but below the 0.5% forecast. Core PCE held steady at 0.3%, matching expectations.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 101.12 after hitting a more than one-year high near 101.80 earlier this week.
The data helped temper expectations of an imminent Federal Reserve (Fed) interest rate hike. However, with annual inflation still running well above the central bank's 2% target, traders continue to expect interest rates to remain unchanged in the coming months while leaving the door open to a rate hike later this year.
On Thursday, Chicago Fed President Austan Goolsbee said core inflation is "still well too high" and is "trending the wrong way." New York Fed President John Williams said it remains imperative for the Fed to bring inflation back to its 2% target.
A Reuters poll released on Friday showed that 78 of 102 economists expect the Fed to keep interest rates unchanged at 3.50-3.75% through the end of 2026.
On the Swiss side, the Swiss National Bank (SNB) continues to maintain a steady monetary policy stance, keeping its policy rate at 0% as inflation remains near the lower end of the central bank's 0-2% price stability range.
The International Monetary Fund (IMF) said on Thursday, "The monetary policy stance is appropriate, but high uncertainty warrants maintaining flexibility to adjust policy rates in either direction."
"Under a stagflation scenario triggered by a sharp and sustained rise in energy prices, higher interest rates might be necessary." It added that in "a severely disinflationary demand shock," "negative interest rates, despite possible financial system distortions, are the strongest of the SNB's policy options," the IMF added.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
TD Securities’ Head of Commodity Strategy Bart Melek highlights that Gold recently broke below $4,000/oz as higher US rates and a firmer Dollar weigh on the metal. Oil shock–driven inflation and a restrictive Federal Reserve (Fed) stance could push prices a few hundred dollars below long-term support near $3,900/oz before a potential recovery toward new record highs above $5,300/oz next year.
Oil shock and Fed policy weigh on bullion
"Higher rates across the curve may continue to pressure the yellow metal below the current long-term support level of $3,900/oz. The pullback is likely to remain driven by Strait of Hormuz–related oil and inflation shocks, which have prompted the market to price in higher policy rates later in the year."
"We believe Brent could still move into the $90–110/bbl range, lifting inflation expectations and reinforcing a restrictive policy bias, thereby increasing carry and opportunity costs for gold holders."
"There is a path to $5,350+ once the conflict and oil-driven inflation pressures fade. A later pivot toward the Fed’s maximum employment mandate, alongside lower yields and a softer USD, plus renewed investor and central bank demand, could reignite the bull trend following a potential test of the $3,900/oz long-term support level."
"Fears that inflation expectations may become unanchored continue to loom large, and with it the possibility of significant CTA selling, which could easily drive the metal a few hundred dollars below its long-term support level near $3,900/oz. The risk is that this oil shock persists into the fall, which would likely prompt the market to price in additional rate hikes."
"If long-term support holds as expected, gold is well positioned to reach new highs in a post–Iran war environment. Once the oil market begins to stabilize and inflation signals ease, we see the yellow metal moving back toward $5,300+ territory by mid-next year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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