Gold Price Forecast: XAU/USD steadies above $4,500 awaiting news from Iran
- Gold flatlines above $4,500 after a four-day decline from $4,770.
- Renewed hopes of advances in the US-Iran peace process are weighing on the US Dollar.
- The high US Treasury yields are keeping precious metals subdued.
Gold (XAU/USD) is trading flat above $4,500 on Monday, stabilising after a four-day sell-off from $4,770. Investors await developments in the Middle East conflict as a spokesperson for the Iranian Foreign Ministry affirmed earlier on the day that the US-Iran talks are ongoing.
An Iranian official lifted market sentiment on Monday, stating that Washington and Tehran are analysing a recent peace proposal. The same source added on local media that Iranian and Omani technical teams were discussing options to restore safe transit through the Strait of Hormuz.
Precious metals, however, remain weighed down by a global bond rout, amid high Oil prices. The US 10-year yields are trading at one-year highs at 4.60%, as fast-rising inflation, coupled with the solid economic data recently released, has boosted hopes of Federal Reserve (Fed) rate hikes in late 2026 or early 2027.
Technical Analysis: Gold remains under pressure
XAU/USD retains a bearish near-term bias following a nearly 4% decline last week. The 4-hour Relative Strength Index (RSI) remains in oversold levels, which explains Monday's consolidating tone, but the negative Moving Average Convergence Divergence (MACD) hints at a slowing downside momentum rather than a clear reversal as red histogram bars contract.
Initial support lies at the $4,500 area (May 4, 18 lows). A confirmation below here would renew bearish momentum, increasing pressure towards the March 26 low at the $4,350 area.
Upside attempts, on the contrary, remain capped below the $4,560 area on Monday, although the first relevant resistance area comes at previous lows around $4,640, ahead of May 7 and 12 highs at the mentioned $4,770.
(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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