Gold rallies to $4,600 as US-Iran ceasefire hopes ease rate hike fears
- Gold attracts follow-through buyers as hopes for a US-Iran ceasefire temper hawkish central bank bets.
- Geopolitical risks remain in play, underpinning the USD and capping gains for the precious metal.
- The technical setup favors bullish traders and backs the case for a further near-term appreciation.
Gold (XAU/USD) builds on this week's solid recovery from a technically significant 200-day Simple Moving Average (SMA) near the $4,100 mark, or a four-month low, and climbs to the $4,600 mark during the Asian session on Wednesday. The precious metal, however, remains highly sensitive to geopolitical headlines, and volatility is expected to remain elevated as investors react to further developments in the ongoing conflict.
Reports suggest that diplomatic efforts are underway to introduce a one-month ceasefire mechanism to allow the US and Iran to negotiate a plan to end the conflict. This follows US President Donald Trump’s decision earlier this week to delay planned strikes on Iran's energy infrastructure by five days, citing indirect negotiations, fueling hopes for de-escalation of tensions in the Middle East. Adding to this, Trump said that Iran offered a "present" linked to energy flows through the Strait of Hormuz to demonstrate goodwill in negotiations. The optimism weighs on Crude Oil prices and eases inflationary concerns, tempering bets for more hawkish central banks and assisting the non-yielding Gold to attract buyers for the second consecutive day.
The conflict, however, shows no signs of easing, with Israel continuing its strikes on the Islamic Republic and the US deploying additional troops to the region. In fact, the Trump administration has directed thousands of soldiers from the US Army's elite 82nd Airborne Division to the Middle East. Iran, on the other hand, has fired a new missile barrage at Israel, while Gulf countries also reported repeated drone and missile interceptions, as fighting intensifies in Lebanon and Iraq. This keeps investors on edge and limits the downside for Crude Oil prices. Moreover, markets continue to factor in inflation risks stemming from elevated energy prices and uncertainty around the interest rate trajectory, which, in turn, acts as a headwind for the Gold price.
Meanwhile, traders have nearly fully priced out the possibility of any further interest rate cuts by the US Federal Reserve (Fed) and are rapidly increasing bets for a hike by the end of this year. The hawkish outlook offers some support to the US Dollar (USD) and might further cap the XAU/USD pair. Hence, it will be prudent to wait for strong follow-through buying before confirming that the Gold price has formed a near-term bottom and positioning for any further appreciating move.
XAU/USD 1-hour chart
Gold bulls await acceptance above 38.2% Fibo. level, $4,600 mark
From a technical perspective, an intraday breakout through the 100-hour SMA could be seen as a key trigger for bullish traders. The subsequent move up, however, stalls near the 38.2% Fibonacci retracement level of the downfall from the March swing high, warranting some caution before positioning for any further appreciating move for the Gold price.
Meanwhile, the Moving Average Convergence Divergence (MACD) histogram remains positive with the line above its signal, reinforcing upward momentum. Moreover, the Relative Strength Index (RSI) hovers in the high 60s, showing firm but not extreme bullish pressure that keeps buyers in control on intraday dips.
A sustained break and acceptance above the $4,600 mark will reaffirm the constructive outlook, paving the way toward the next upside objective near $4,637 en route to the mid-$4,750 zone aligned, where the 50.0% retracement caps the broader rebound. On the downside, immediate support is located at $4,470, with stronger follow-through demand expected around $4,401 at the 23.6% retracement, where prior consolidation and Fibonacci structure converge.
A drop below $4,401 would weaken the current bullish bias and expose a deeper retracement toward the $4,250–$4,300 region, while holding above these supports keeps the intraday uptrend intact.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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