Gold Rebounds but Rising Wedge Signals Downside Risk

Gold is bouncing back on Thursday, recovering most of its earlier losses after buyers stepped in to defend the $4,600 level. The weaker US Dollar and lower Treasury yields are also lending some support. Right now, XAU/USD is trading near $4,645, a rebound from the $4,554 low seen during the European session.

The metal remains sensitive to developments in the Middle East. Risk sentiment improved after reports that Iran and Oman are cooperating to manage shipping through the Strait of Hormuz. An Iranian deputy foreign minister told Tasnim news that the two countries are working on a joint protocol to keep maritime traffic safe once the conflict eases.

Earlier, gold had dropped by as much as 4% following US President Donald Trump’s address, where he signaled ongoing military operations. Trump said the US is close to completing its military goals and warned of heavy strikes over the next few weeks, saying Washington would “bring them back to the stone ages.” He also mentioned that negotiations are continuing, adding “We have all the cards; they have none.”

These comments raise concerns about a prolonged conflict and persistent disruptions to energy shipments through the Strait, which keeps oil prices high.

The outlook for interest rates remains a challenge for gold. Rising inflation and economic risks tied to higher energy costs are pushing central banks, especially the Federal Reserve, to take a more hawkish stance. This makes gold less attractive as a safe haven because higher rates increase the cost of holding a non-yielding asset.

The idea that rates will stay elevated for a longer time has weighed on gold since the Middle East conflict started. The CME FedWatch Tool shows that markets now expect the Fed to keep rates steady in the 3.50%-3.75% range this year, instead of cutting them as was anticipated earlier.

Fed officials sounded cautious this week, indicating no rush to change rates despite inflation concerns coming from energy prices.

St. Louis Fed President Alberto Musalem said on Wednesday that current policy is “well positioned” and should remain unchanged for a while. He also pointed out that risks to inflation and employment seem tilted downward and described the economic outlook as “highly uncertain.”

Kansas City Fed President Jeffrey Schmid said on Tuesday that the Fed needs to “follow through with policy actions to validate stable medium- and long-term inflation expectations.” He also expressed doubt that inflation from higher oil prices will be short-lived.

Looking at gold on the 4-hour chart, the price is around 4,647 and forming a rising wedge after a sharp drop. This pattern looks like a bounce rather than a full trend reversal.

The price movement is basically a drop, then a pause, followed by a slow climb. It’s holding an upward trendline but momentum is weakening.

Key levels to watch are resistance around 4,800–4,830, the current price reaction zone at 4,580–4,620, support between 4,500–4,420, and a major support zone near 4,180.

The price already faced rejection near the wedge’s upper boundary. The MACD indicator is flattening, which shows momentum is fading. Rising wedges like this often break down rather than move higher.

On the bearish side, if gold stays below 4,650 and breaks the trendline, it could fall toward 4,500 and 4,420, with a deeper drop possible down to 4,180.

The bullish scenario would only be realistic if the price breaks above 4,830 and holds, potentially pushing gold up to 4,950–5,100.

Overall, this looks like a temporary bounce within a downtrend. The chances indicate further weakness unless resistance is clearly surpassed.

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