Gold remains depressed as skepticism over US-Iran truce supports USD
- Gold trades with a mild negative bias on Thursday, though it lacks follow-through selling.
- The fragile US-Iran ceasefire supports the USD and acts as a headwind for the commodity.
- The Fed’s dovish outlook caps the USD and lends support to the non-yielding yellow metal.
Gold (XAU/USD) once again shows some resilience below the $4,700 mark during the Asian session on Thursday, and for now, seems to have stalled the previous day's retracement slide from a three-week high. Skepticism over the durability of the US-Iran ceasefire benefits the US Dollar's (USD) reserve currency status and acts as a headwind for the commodity. However, the US Federal Reserve's (Fed) dovish outlook holds back the USD bulls from placing aggressive bets and helps limit the downside for the non-yielding yellow metal.
Israel carried out a large wave of air strikes across Lebanon, saying that the ceasefire was not extended to Lebanon due to the role of the armed group Hezbollah. The White House also confirmed that Lebanon is not part of the two-week ceasefire drawn up between Iran and the US. In response, Iran once again shut down shipping traffic through the critical Strait of Hormuz and threatened to withdraw from the ceasefire if Israel continues to attack Lebanon. This keeps a lid on the optimism and supports the USD, undermining the Gold price.
Meanwhile, Minutes from the March 17–18 FOMC meeting released on Wednesday revealed a higher-for-longer stance, with officials in no rush to cut interest rates amid upside risks to inflation stemming from Middle East energy price shocks. That said, policymakers still signaled one rate reduction by the end of this year and another in 2027, though the timing remains unclear. This caps the attempted USD recovery from a nearly one-month low, touched the previous day, and turns out to be a key factor offering some support to the Gold price.
Traders also seem hesitant ahead of the release of the crucial US Personal Consumption Expenditures (PCE) Price Index – the Fed's preferred inflation gauge – later during the North American session. Apart from this, the US Consumer Price Index (CPI) report on Friday would be looked for more cues about the Fed's policy outlook and drive the USD price, providing some meaningful impetus to the Gold price. Nevertheless, the mixed fundamental backdrop warrants caution before positioning for a firm intraday direction for the XAU/USD pair.
XAU/USD 4-hour chart
Gold seems vulnerable amid bearish technical setup; acceptance below $4,700 awaited
The XAU/USD pair holds beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart and the 50.0% retracement of the March downside, keeping a bearish bias intact. Adding to this, the Moving Average Convergence Divergence (MACD) indicator slips into negative territory, and the Relative Strength Index (RSI) hovers around a neutral 52, hinting at waning bullish momentum rather than a fresh impulsive leg higher.
Meanwhile, initial support emerges at the 38.2% Fibo. retracement around $4,604, with further cushions at the 23.6% level near $4,412 and the prior swing low region close to $4,102, where buyers would be expected to show more interest. On the topside, immediate resistance is located at the 50.0% Fibonacci retracement at $4,758, followed by a heavier barrier in the $4,895–$4,914 zone where the 200-period SMA and the 61.8% retracement converge, ahead of higher hurdles at the $5,000 psychological mark.
(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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