Gold fell on Friday, showing negative signals after breaking below the daily pivot point at $4619. If the yellow metal settles below this level, it could face further downward pressure and head toward support levels at $4568 then $4540. On the other hand, if the price gains further positive momentum, it is likely to retest resistance levels at $4657 then $4689.
Global markets remain cautious amid rising geopolitical tensions and ongoing economic pressures, as Iran announced that it would respond with strikes on U.S. sites if attacks resume, increasing investor concerns over regional stability and the potential impact on energy markets. At the same time, economic data showed that annual U.S. inflation recorded its biggest increase in nearly three years in March, reinforcing expectations that the Federal Reserve may maintain its tight monetary policy for a longer period. Meanwhile, the U.S. dollar remained near its lowest levels in two weeks, as weaker safe-haven demand and anticipation of upcoming economic data continued to influence market sentiment and expectations for future U.S. monetary policy.
Market Watch
Iran says it would retaliate with strikes on U.S. positions
Iran said on Friday that it would respond with “long and painful strikes” against U.S. sites and interests if Washington decides to resume military attacks, marking a new escalation in tensions between the two sides despite recent efforts to maintain calm.
Tehran stated that any new U.S. attack would be met with a direct response targeting American positions in the region, stressing that it would not tolerate threats to its strategic interests, particularly amid ongoing disputes over the Strait of Hormuz and the U.S. military presence in the Gulf.
These statements come as diplomatic efforts remain stalled, despite the ceasefire that has been in place since early April, while the issue of reopening the Strait of Hormuz continues to be a major point of disagreement between both sides.
Meanwhile, reports indicated that President Donald Trump was expected to receive a military briefing on possible options for launching new strikes against Iran, aimed at pressuring Tehran into negotiations to end the current escalation.
Investors fear that any renewed confrontation could cause major disruptions in global energy markets, especially as key shipping routes remain under pressure, through which a significant share of the world’s oil and gas exports pass.
Annual U.S. inflation posts biggest gain in about 3 years in March
Annual inflation in the United States recorded its biggest increase in nearly three years in March, driven by a sharp rise in gasoline prices amid escalating geopolitical tensions and the ongoing war with Iran, reinforcing expectations that the Federal Reserve may keep interest rates higher for longer.
Data from the U.S. Department of Commerce showed that the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, rose by 0.7% in March, marking the largest monthly increase since June 2022, following a 0.4% rise in February.
On an annual basis, inflation climbed to 3.5% over the 12 months through March, compared with 2.8% in February, representing the biggest yearly increase since May 2023 and highlighting persistent inflationary pressures on the U.S. economy.
The increase was mainly driven by higher fuel prices, as average retail gasoline prices surged by 24.1% in March, reaching their highest levels in nearly four years, according to data from the U.S. Energy Information Administration.
Consumer spending also increased by 0.9% in March, but after adjusting for inflation, the real gain was only 0.2%, indicating some moderation in spending strength as households continue to face rising prices.
Analysts believe these figures could lead the Federal Reserve to delay any potential interest rate cuts, especially with inflation remaining well above its official 2% target.
U.S. dollar near its lowest level in two weeks
The U.S. dollar remained near its lowest levels in two weeks on Friday against a basket of major currencies, as demand for the greenback as a safe-haven asset weakened amid improved risk appetite in global markets, while investors continued to monitor geopolitical developments and central bank policy decisions.
The decline came after Japanese authorities intervened to support the yen, leading to a sharp rebound in the Japanese currency and pushing the dollar lower against it. Market participants remained cautious over the possibility of further interventions by Japan’s Ministry of Finance.
Expectations surrounding U.S. monetary policy also added pressure on the dollar, as traders closely watched the path of U.S. inflation and the likelihood that the Federal Reserve may keep interest rates elevated for a longer period.
In the markets, the dollar fell to around 155.6 yen during trading, after previously approaching its highest levels in two years, while the euro remained relatively stable against the U.S. currency amid continued caution over war developments and tensions in the Middle East.
Analysts believe that continued pressure on the dollar will depend largely on the direction of oil prices, upcoming U.S. labor market data, and any further official moves by Japan in the foreign exchange market.
Looking Ahead
Markets are closely watching today’s release of the U.S. Purchasing Managers’ Index (PMI), one of the most important economic indicators measuring the performance of the manufacturing and services sectors in the United States, as well as overall business activity and corporate confidence. Investors are paying close attention to these data due to their direct impact on expectations for Federal Reserve monetary policy, especially amid ongoing inflationary pressures and growing anticipation over the future path of U.S. interest rates in the coming period.