Gold Price Slips As Waller’s Hawkish Comments Lift USD

Gold price edges lower during the day as the Greenback recovers some ground amid doubts that the US and Iran could reach a deal to end the conflict, and traders are pricing in a Federal Reserve (Fed) rate hike by the end of the year. At the time of writing, XAU/USD trades at $4,518, down 0.50%.

XAU/USD falls as US Dollar strength pressures Bullion demand

The Greenback is weighing on the yellow metal, underpinned by hawkish remarks of a Fed official. The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, is up 0.07%, at 99.26.

Oil prices continued to rise as doubts about a possible Iran deal increased. Mixed messages regarding Iran’s uranium, the “draft” sent by Washington to Tehran, and Al-Arabiya citing sources that a deal is not within reach circulated despite the visit of the Pakistan Army Chief to Iran.

Fed Governor Christopher Waller indicated that he doesn’t anticipate backing a policy rate change at this time, but he prefers to eliminate the easing bias from the statement. He also mentioned that if inflation expectations drift away from the target, he “would not hesitate” to support increasing the rate. He now labels rate cut talk as “crazy.”

The recently sworn in new Fed Chair, Kevin Warsh, said that he will lead a “reform-oriented” central bank, that he is not naïve about the challenges he faces, and that he “will learn from past mistakes and successes.” During Warsh’s swearing-in, US President Donald Trump did not call for rate cuts, emphasizing that he wants him to remain “fully independent” in his new role.

Money markets received a warning, with the odds of a US rate hike by December 2026 rising, according to Prime Terminal data.

US Consumer Sentiment deteriorated sharply, with the University of Michigan index falling from the preliminary May reading of 48.2 to 44.8 — a record low and below the 48.2 economists had expected. The survey also showed growing concern over the cost of living, with Joanne Hsu, the survey director, saying high prices are straining household finances, up from 50% last month.

Inflation expectations rose from 4.7% to 4.8% over the next twelve months and from 3.5% to 3.9% over the next five years.

Next week, the US economic docket will feature speeches by Fed officials, housing data, first-quarter 2026 Gross Domestic Product (GDP) figures, and the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index.

XAU/USD technical outlook: Gold to consolidate further as bulls eye $4,550

Gold price seems to have bottomed at around $4,450 during the week. Since then, the XAU/USD has registered back-to-back trading days printing higher lows, with buyers eyeing a clear breakout of the May 19 daily high of $4,589 to extend the upward move toward the $4,600 milestone.

Momentum remains bearish, as indicated by the Relative Strength Index (RSI), which is aiming lower, deep into oversold territory.

For a bearish continuation, Gold must clear $4,450, which could pave the way for a challenge of $4,400. Below here lies the 200-day Simple Moving Average (SMA) at $4,352, seen by buyers as the last line of defense, before the non-yielding metal turns bearishly biased.

On the upside, if XAU/USD surpasses the $4,550 mark, expect a test of the 20-day SMA at $4,609. Up next, the 50-day SMA at $4,667 is the area of interest.