Gold Price Forecast: XAU/USD hovers below $4,850 with US-Iran peace talks in focus
- Gold keeps hovering near recent highs, with resistance in the $4,850 area capping bulls.
- Investors' optimism about the outcome of the US-Iran peace talks keeps precious metals buoyed.
- XAU/USD is trapped within a horizontal channel between $4,600 and $4,850.
Gold’s (XAU/USD) remains practically flat, at $4,790 at the time of writing on Friday, lacking a clear bias after pulling back from one-month highs, at $4,871 earlier this week. Precious metals are consolidating recent gains on Friday, supported by a mild US Dollar weakness as investors await developments from the US-Iran peace talks.
News from Iran and the US are diverging, but the market is sticking to US President Donald Trump’s positive comments. He announced a 10-day ceasefire between Lebanon and Israel on Thursday and affirmed that a deal with Iran is “very close”, which has boosted expectations about the peace talks that will resume in Pakistan this weekend.
Reuters, however, has released a report citing Iranian sources that suggests that negotiators from the US and Iran have scaled back expectations for a lasting peace agreement and are now seeking a “temporary memorandum” to avoid further escalation of the conflict.
Technical Analysis: Indicators hint at a weaker bullish momentum
XAU/USD treads water just below the top of the last two weeks' trading range between $4,600 and $4,850, although technical indicators in the four-hour chart show a fading bullish momentum. The Relative Strength Index (RSI) is flirting with the 50 line, showing a lack of directional pressure, while the Moving Average Convergence Divergence (MACD) is negative and declining. All this hints at a waning bullish momentum and leaves Gold vulnerable to further consolidation.
Initial resistance emerges at the horizontal barrier above $4,850, which capped bulls on April 8,15 and 16. A bullish move above here brings the previous support-turned-resistance right above $5,000 into focus. Further up, the next target would be the March 10 high, at $5,238.
On the downside, Wednesday's and Thursday's lows around $4,775 are holding downside attempts for now. The key support level, however, is the bottom of the recent range around $4,600. A confirmation below here negates the near-term bullish view and exposes the March 26 lows at the $4,350 area.
(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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