A technical rebound has helped gold prices recover from recent losses, but the precious metal remains vulnerable as rising US Treasury yields, a stronger US dollar, and escalating geopolitical tensions continue to dominate market sentiment. With the US Producer Price Index (PPI) and fresh developments surrounding the US-Iran conflict in focus, the end of the week could prove decisive for gold's next direction.
The US 10-year Treasury yield climbed back above 5%, reaching a high of 5.125%, supporting a stronger US Dollar Index (DXY), which recovered toward 103. This pushed gold prices lower, forcing the metal to close below $3,900 and erasing much of its gains recorded since early November 2026.
The latest pressure was triggered by President Donald Trump's statement that the United States no longer needed an agreement with Iran. His remarks fueled concerns that US-Iran mediation efforts could fail, making a diplomatic breakthrough increasingly difficult in the near term.
Latest Military Developments
Iranian media reported a new attack on Sirik Island in Hormozgan Province. Iran has indicated that reaching an acceptable agreement appears increasingly difficult, raising concerns that further military confrontation may be unavoidable.
These developments were reinforced by reports that the United States was deploying a third aircraft carrier to the conflict region, alongside discussions about a potential military strike next week, possibly around November 24, during the full moon.
Market uncertainty increased further after Trump dismissed speculation that Vice President JD Vance would negotiate directly with Iran. Trump said he had instructed Vance to focus entirely on alleged widespread corruption and major crimes in Democratic-led cities and states across the United States.
The statement weakened expectations that diplomatic negotiations could gain momentum, leaving markets concerned that Washington's next steps might place less emphasis on diplomacy.
Additional concerns emerged as Israel reportedly began preparing for the possibility of further military action against Iran. Israeli officials indicated that the country did not need approval from the opposition to continue its military operations against Iran.
Williams Rejects Aggressive Rate Hikes
On the monetary policy front, more reassuring comments from Federal Reserve official John Williams helped ease concerns about a potential 50-basis-point interest rate increase in December.
Before the latest CPI release, Fed Governor Christopher Waller had suggested that he would support a more aggressive 50-basis-point increase if core CPI came in at 0.3% month-over-month or higher.
However, Williams said he saw no urgency for such an aggressive move, signaling a preference for a more gradual and steady pace of 25-basis-point rate adjustments.
His comments provided some relief to financial markets and helped gold stage a modest rebound during Friday's Asian session. The recovery was also supported by oversold RSI conditions on both the H1 and H4 charts.
Nevertheless, geopolitical risks remain elevated. Iran's Islamic Revolutionary Guard Corps (IRGC) claimed that it had attacked US assets in Bahrain and destroyed an American early-warning radar system in the country.
The IRGC described the operation as retaliation for an airstrike targeting a telecommunications tower in Sirik, near Iran's Strait of Hormuz coastline. Neither US nor Bahraini officials had immediately issued a direct response to the claims, leaving traders facing considerable uncertainty heading into the weekend.
The main risk is that Washington could respond with further military strikes, potentially prompting Trump to declare an open war. An even more severe scenario would involve additional Israeli attacks against Iran.
Under this escalation scenario, gold could break below $3,850, exposing downside targets around $3,800-$3,820. In a more extreme situation, losses could extend toward $3,700-$3,717.
Conversely, if a wider military confrontation is avoided and Trump characterizes any action as a limited strike while reaffirming his preference for mediation, gold's downside could remain relatively contained.
In this scenario, the $3,820 and $3,850 regions could become important downside targets, followed by an opportunity for a technical rebound toward the $3,990-$4,000 area.
US PPI and Fed Official in Focus
On the economic calendar, the US Producer Price Index (PPI), scheduled for 20:30 WIB, and remarks from Michelle Bowman at 22:50 WIB will be the main events to watch.
Previous CPI data showed stronger-than-expected consumer inflation, making the upcoming PPI report particularly important as it provides further insight into inflationary pressures at the producer level.
A hotter-than-expected PPI reading could strengthen the US dollar and increase pressure on gold prices. Conversely, softer inflation figures could weaken the Greenback and create room for gold to extend its technical recovery toward the identified resistance levels.
Gold Technical Analysis
The daily candlestick chart has now recorded three consecutive bearish sessions after gold prices fell below $3,900. The latest decline also pushed prices slightly below the previous low recorded on October 30, 2026, at $3,870.17, with the latest low reaching $3,852.35.
From a technical perspective, the risk of further downside remains significant. However, the RSI indicator is showing a higher low compared with its October 30 reading, while gold prices have formed a lower low.
This configuration suggests a potential bullish divergence, indicating that bearish momentum may be weakening and opening the door for a corrective rebound.
On the daily chart, the $3,948-$3,971 region has become the latest resistance zone. A sustained move above this area would provide an initial bullish signal and improve the prospects of further recovery.
However, a stronger bullish reversal would only be confirmed if gold manages to break above $4,014 and subsequently $4,057.
On the downside, a decisive break below $3,850 would expose the next support around $3,820, with a deeper downside target near $3,717.
In an extreme scenario involving further military escalation, selling pressure could intensify and push gold prices below $3,717.
For now, gold remains caught between the possibility of a technical recovery and the risk of renewed selling pressure. The upcoming US PPI release, Federal Reserve commentary, and developments in the Middle East will likely determine whether the precious metal can reclaim the $4,000 level or extend its bearish correction.