Gold Consolidates Above 4,600, Pressured by Dollar and Fed Signals
Gold prices (XAU/USD) moved within a narrow range during the Asian session on Friday (May 1), holding comfortably above the US$4,600 level. Despite strengthening the previous day, gold has not received further buying and is still heading for a second consecutive weekly decline.
Gold's movement was limited by the US dollar, which has stabilized after weakening on Thursday, when geopolitical risks increased due to the stalled US-Iran peace talks. In such conditions, the dollar's status as a reserve asset tends to be supported, thus limiting gold's upside.
Geopolitical pressure also came from US President Donald Trump's statement rejecting Iran's proposal to open the Strait of Hormuz and ease the blockade, and asserting that the naval blockade would remain in place until an agreement addresses US concerns about Iran's nuclear program. Reports that the US is considering new military strikes also reinforced the cautious market sentiment.
On the monetary policy front, the Fed held interest rates at 3.50%–3.75% on Wednesday, with the highest number of dissenters since 1992, as three policymakers rejected a more accommodative tone in the statement. This hawkish tone supported the dollar and acted as a drag on gold, as it offers no yield.
Recent US data reinforces the narrative of rebounding inflation and a resilient economy. The PCE price index rose 0.7% month-on-month in March, while the annual rate rose to 3.5% from 2.8% in February; core PCE rose 3.2% year-on-year from 3.0%. The preliminary GDP estimate shows the US economy growing 2.0% (annualized) in the first quarter of 2026, up from 0.5% in the fourth quarter of 2025.
However, the market is also starting to re-adjust the odds for further easing: the probability of at least one 25-bps cut in 2026 rose to over 15% from 1.3% the day before. This shift has kept dollar market players from being aggressive, helping limit downward pressure on gold. The next focus turns to the release of the ISM Manufacturing PMI, while the market remains sensitive to developments in the Middle East that could alter the direction of the dollar and gold.
5 key points:
- Gold holds above US$4,600, but there has been no follow-through buying and is at risk of a second weekly negative.
- US-Iran tensions support the dollar, limiting gold's upside.
- Trump confirms Iran's blockade remains in place; there are reports of new attacks being considered.
- The Fed holds interest rates at 3.50%–3.75% with strong dissent; PCE and GDP data show inflation strengthening, and the economy remains solid.
- The probability of a 2026 rate cut rises above 15%, limiting dollar strength; the market awaits the ISM PMI and Middle East headlines. (asd)
Source: Newsmaker.id
