Gold Price Forecast: Will XAU/USD Break Below $4,000 After the Hawkish Fed and Iran Deal?
Although important technical support near $4,000 is still in place, gold closed the week substantially lower as the U.S. dollar surged due to a hawkish Federal Reserve and lessening geopolitical concerns.
Quick overview
- Gold prices fell sharply by nearly $100 after a strong start, influenced by a hawkish Federal Reserve and easing geopolitical tensions.
- The $4,000 support level remains critical, with technical analysts viewing it as a major zone that needs to hold to avoid a bearish reversal.
- The Federal Reserve's updated economic projections indicated a potential rate increase, strengthening the U.S. dollar and impacting gold negatively.
- Despite recent declines, the longer-term outlook for gold remains constructive as it continues to trade above the important $4,000 support area.
Live GOLD Chart
Although important technical support near $4,000 is still in place, gold closed the week substantially lower as the U.S. dollar surged due to a hawkish Federal Reserve and lessening geopolitical concerns.
Early Gains Fade as Market Sentiment Shifts
Gold prices experienced a volatile week, ultimately finishing nearly $100 lower after a strong start was reversed by a hawkish Federal Reserve and improving geopolitical sentiment. Although the precious metal initially rallied above $4,300, the combination of stronger U.S. economic data, higher Treasury yields, and a stronger U.S. dollar pushed XAU/USD sharply lower toward the key $4,000 support level.
Despite the decline, the broader uptrend has not yet been broken. Technical analysts continue to view the $4,000 level as a major support zone, with a sustained move below that threshold needed to confirm a more significant bearish reversal.
Iran Peace Framework Reduces Safe-Haven Demand
Gold opened the week with a bullish gap and climbed more than 2% after the United States and Iran announced a framework agreement aimed at ending months of conflict.
The agreement included plans to reopen the Strait of Hormuz, ease regional tensions, and begin a 60-day round of nuclear negotiations. President Trump, Vice President JD Vance, and Iranian Parliament Speaker Mohammad Bagher Ghalibaf formally endorsed the agreement, while subsequent ceasefire developments further improved investor confidence.
As geopolitical risks eased, crude oil prices fell sharply, reducing demand for traditional safe-haven assets such as gold and prompting investors to rotate back into riskier investments.
Federal Reserve Delivers Hawkish Surprise
The biggest catalyst for gold’s reversal came after the Federal Reserve concluded its latest policy meeting.
As expected, policymakers left interest rates unchanged within a range of 3.5% to 3.75%. However, investors were surprised by the central bank’s updated economic projections, which removed earlier easing language and instead pointed toward the possibility of a 25-basis-point rate increase during 2026.
During his post-meeting press conference, Federal Reserve Chair Kevin Warsh maintained a measured tone but stopped short of signaling a return to monetary easing. Markets interpreted his comments, together with the updated projections, as a hawkish shift that reinforced expectations for higher interest rates over an extended period.
The result was a stronger U.S. dollar and rising Treasury yields, both of which traditionally weigh on gold because they increase the opportunity cost of holding non-yielding assets.
Technical Analysis—The 4,000 Support Is Under Attack
Technically, the correction early in 2026 was severe. Gold broke decisively below its 20-day simple moving average, ending a streak of consistent trend support. Attention quickly shifted to the 50-day moving average near $5,000 which was also broken and in late March we saw a decline below the early February low of $4,400, and XAU bottomed at $4,023 last week.
Gold Chart Daily – Gold Rebounds Off the 100 SMA
Gold found support at the 100 SMA (red) which was broken as support last seek. Gold slipped to $4,318 on Friday, closing below the 100 SMA for the first time since 2023. Besides that, Gold broke below the 50 SMA (yellow) on the weekly chart as well.
Gold Chart Weekly – The 50 SMA Turned Into Resistance
The ability to hold above $4,000 carries psychological importance. Reclaiming such a major round-number threshold often stabilizes sentiment, especially after a period of forced liquidation. While volatility remains elevated, the ability to defend longer-term trend support suggests that structural buyers remain active.
Strong Economic Data Supports Higher Rates
Recent U.S. economic data further strengthened the case for a more restrictive monetary policy.
Headline inflation accelerated to 4.2% year-over-year in May, while core inflation edged higher to 2.9%, suggesting that underlying price pressures remain persistent. At the same time, the labor market continued to demonstrate resilience, with the U.S. economy adding 172,000 jobs during May.
The combination of firm inflation and solid employment has reduced expectations for near-term interest rate cuts and increased confidence that borrowing costs will remain elevated heading into the second half of the year.
Technical Outlook Focuses on $4,000 Support
Although gold has surrendered much of this week’s gains, the longer-term technical picture remains constructive.
The recent decline has shifted short-term momentum in favor of sellers, but the broader bullish trend remains intact while prices continue trading above the important $4,000 support area.
Should that level hold, buyers could return as markets reassess inflation risks and geopolitical developments. However, a decisive break below $4,000 would likely confirm a broader trend reversal and could open the door to a deeper correction in the weeks ahead.
For now, investors remain focused on upcoming U.S. economic data, Federal Reserve commentary, and geopolitical developments, all of which are expected to determine whether gold can stabilize or extend its recent pullback.
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