Gold prices declined by 0.70% on Friday and are set to end the week with losses exceeding 2%, as the US Dollar Index (DXY) surged above 100.00, reaching 100.43, and investors sought safety in the Greenback amid escalating Middle East conflict and inflation concerns [1]. The XAU/USD pair traded at $5,032 after hitting a daily high of $5,128, with bullion slipping below $5,050 due to rising yields and geopolitical tensions [1]. US economic data revealed a slowdown, with Q4 2025 GDP growth dropping from 1.4% to 0.7% year-over-year, while the Core PCE Price Index remained steady at 3.1% YoY in January and headline inflation eased slightly from 2.9% to 2.8% YoY [1].
Standard & Poor's warned that Iran's war could trigger lasting supply shocks, potentially resulting in lower US GDP growth and higher inflation, contributing to a stagflationary outlook [1]. US Treasury yields climbed, with the 10-year T-note yield rising nearly 2.5 basis points to 4.286%, further pressuring precious metals [1]. Money market traders have priced in a less dovish Federal Reserve, expecting only 20 basis points of easing, according to CBOT data [1]. The ongoing Middle East conflict has also pushed WTI crude oil prices to a year-high of $113.00, and gasoline prices at the pump have surged over 20%, reaching $3.60 per gallon since the conflict began two weeks ago [1].
President Donald Trump announced that the US will take strong action against Iran next week, following the expiration of a 30-day waiver for purchasing sanctioned Russian oil [1]. Market participants are expected to closely monitor geopolitical developments over the weekend and shift their attention to the upcoming Federal Reserve meeting on March 17-18, as well as key US economic indicators including Industrial Production, housing statistics, PPI, and employment data [1].
Technically, gold's outlook has turned bearish in the near term, with XAU/USD poised to challenge the $5,000 support level. A break below this could lead to a test of the 50-day Simple Moving Average at $4,925. The Relative Strength Index (RSI) has fallen below its 50-neutral level, indicating bearish momentum and suggesting that the most likely scenario is further downside for gold [1].
CONCLUSION
Gold is facing significant downward pressure due to a stronger US Dollar, rising yields, and heightened geopolitical risks, with technical indicators pointing to further declines. Traders are bracing for continued volatility as they await US Federal Reserve decisions and monitor ongoing Middle East developments. The market sentiment is negative, and gold may test key support levels in the coming days.