Gold slips 3% from two-month high as Iran risks lift dollar

Gold slipped to a fresh weekly low near $4,300 an ounce Friday, extending a pullback from the two-month high of $4,450 reached earlier this week.

Fed funds futures now price just over a 65 percent probability of a rate hike by year-end, down from nearly 75 percent a day earlier and 85 percent a week ago, according to CME Group's FedWatch Tool. US producer prices were unchanged in July, missing the 0.2 percent consensus, with the annual rate easing to 4.7 percent from 5.5 percent in June, the Bureau of Labor Statistics reported Thursday. July consumer prices rose 0.1 percent month over month.

The soft prints followed mixed comments from Federal Open Market Committee members. Chicago Fed President Austan Goolsbee said recent price spikes are largely driven by temporary tariff and energy factors, favoring patience, while Cleveland Fed President Beth Hammack argued progress on inflation is insufficient and further increases may be needed.

Persistent geopolitical risk is keeping the dollar bid. Treasury Secretary Scott Bessent said Thursday the US will apply measures "never seen" on Iran, while a senior IRGC adviser warned Tehran will make any conflict costly for future US administrations. Iran-backed Houthis escalated attacks on Red Sea vessels and claimed a drone strike on a Saudi Aramco refinery, keeping the Strait of Hormuz standoff in focus.

Central bank demand cushions the pullback

Strong official-sector buying is limiting the downside. The Bank of Korea held 679,765 shares of SPDR Gold Trust, valued at roughly $250.4 million as of end-June, a US SEC filing shows. Central banks purchased 288.9 tonnes of gold in Q2 2026, up 62 percent year over year and the strongest second quarter on record, per the World Gold Council.

Technicals point to $4,285 support

Spot gold holds above the 200-period exponential moving average on the 4-hour chart and a cluster of Fibonacci supports, though momentum has softened with the MACD below zero and the relative strength index near 42. Immediate support sits at the 38.2 percent retracement of the latest leg up from the August swing low at $4,285, ahead of the 50 percent level near $4,234 and the 61.8 percent at $4,184. On the topside, resistance is at the 23.6 percent retracement of $4,347, ahead of the cycle high anchor around $4,448.40.

The next test is the Jackson Hole symposium Aug 27-29, where Fed Chair Kevin Warsh delivers his first major speech since taking office May 22. With the Fed no longer telegraphing intentions ahead of meetings, Warsh's remarks carry genuine information value for gold, which trades inversely to real yields. A close above $4,450 would suggest markets are settling on a September hold as the base case.

This article is for informational purposes only and does not constitute investment advice.