Gold sticks to positive bias amid softer USD, safe-haven buying ahead of US-Iran talks
- Gold trades with a positive bias for the second straight day amid a combination of supporting factors.
- Trade uncertainties and geopolitical risks ahead of US-Iran talks continue to underpin the commodity.
- A modest USD weakness and bets for more Fed rate cuts further benefit the non-yielding XAU/USD.
Gold (XAU/USD) attracts some dip-buyers following the previous day's late pullback and climbs back closer to the $5,200 mark during the Asian session on Thursday. This marks the second straight day of a positive move and is supported by sustained safe-haven flows, bolstered by uncertainties surrounding US President Donald Trump's trade policies and US-Iran nuclear talks.
Following the Supreme Court's verdict to block many of Trump's sweeping import taxes on Friday, the president invoked Section 122 of the Tariff Act 1974 to levy 10% additional tariffs. Trump then said on Saturday that the rate would be 15%, though the tariffs were set at the lower rate from Tuesday. However, a White House official said the administration is working to raise it to 15%. There is also anxiety over how long this rate will continue, given Trump's mercurial turns over tariffs, keeping investors on edge and underpinning the Gold.
Meanwhile, Iran and the US are scheduled to hold the third round of talks aimed at resolving the longstanding nuclear dispute amid the risk of imminent US strikes following a large-scale buildup of American forces in the Middle East. In his State of the Union speech on Tuesday, Trump laid out his case for a possible attack on Iran and said he would not allow the world's biggest sponsor of terrorism to have a nuclear weapon. This keeps geopolitical risks in play and turns out to be another factor acting as a tailwind for the safe-haven Gold.
Adding to this, a modest US Dollar (USD) weakness lends additional support to the commodity and contributes to the bid tone. Despite the Federal Reserve's (Fed) hawkish outlook, traders are still pricing in the possibility of three 25-basis-point (bps) rate cuts by the US central bank. Moreover, concerns about retaliatory measures to Trump's tariffs and the potential economic fallout from disruptions to global supply chains keep the USD bulls on the defensive. This, in turn, backs the case for a further near-term appreciating move for the Gold.
XAU/USD 4-hour chart
Gold seems poised to appreciate further while above the $5,100 resistance breakpoint
The recent breakout through the $5,100-mark horizontal barrier was seen as a key trigger for the XAU/USD bulls. The positive outlook is reaffirmed by the fact that the bullion holds above the rising 200-period Simple Moving Average (SMA) near $4,948, which keeps the broader upward structure intact despite the latest pullback from last week’s highs.
The Relative Strength Index (RSI) hovers around 59, above the 50 midline, which suggests underlying buying pressure remains in place rather than a full loss of momentum. However, the Moving Average Convergence Divergence (MACD) has slipped further into negative territory with the line below the Signal line and a negative histogram, pointing to fading upside momentum and warning that bulls lack strong conviction at current levels.
Initial support emerges near $5,150, where recent lows align with the short-term consolidation floor, followed by a deeper cushion at $5,100 if sellers extend the correction. A break below $5,100 would expose the $5,050 area, though the rising 200-period SMA below $4,950 is expected to underpin the broader bullish context while it holds.
On the upside, immediate resistance sits around $5,220, just beneath the recent swing high, with a clear break opening the path toward $5,260. A sustained move above $5,260 would signal renewed bullish momentum and shift the focus to higher highs in the coming sessions.
(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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