Gold rises to weekly high as US, Iran reach peace deal
- Gold price attracts some buyers to a weekly high in Monday’s Asian session.
- US and Iranian officials said they had agreed on a peace framework for a deal to end their war.
- The negative outlook remains intact, with the Gold price holding below the key 100-day SMA.
Gold price (XAU/USD) rises to a weekly high during the Asian trading hours on Monday. The precious metal rebounds after the United States (US) and Iran had reached a deal to end their conflict, easing concerns about inflation and higher interest rates.
Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.
Trump added that the agreement he reached with Iran would ultimately assure that the Strait of Hormuz is “permanently toll-free,” per the New York Times. Hopes of a peace framework for a deal to end the US-Iran war provide some support to the yellow metal.
Meanwhile, Iran’s deputy foreign minister, Kazem Gharibabadi, said on Sunday that the 60-day negotiations between the US and Iran will hinge on the US meeting three commitments. Those commitments include “lifting and ending the naval blockade,” “ending the state of war and military operations,” and “releasing Iran’s frozen funds.”
Any signs of renewed tensions in the Middle East could lead to a rise in crude oil prices, stoking inflation concerns and raising expectations of interest rates staying higher for longer. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.
Markets have priced in nearly a 64% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 69% last week, according to the CME FedWatch tool.
XAU/USD daily chart
Gold remains capped below the key 100-day SMA in daily chart
In the daily chart, XAU/USD remains in a corrective phase, holding well below the 100-day simple moving average (SMA) and also beneath the Bollinger middle band, which together suggest rallies are still capped within a broader downbeat structure. The Relative Strength Index (RSI) near 42 stays below the midline, hinting at subdued upside momentum and reinforcing the view that bounces are more likely to be sold into while price trades under these overhead levels.
On the topside, initial resistance emerges at the Bollinger middle band near $4,415, followed by the upper Bollinger band around $4,685, with the 100-day SMA higher up near $4,762 acting as a more strategic barrier if a stronger rebound unfolds.
On the downside, the first notable support is seen at the lower Bollinger band around $4,142, where a break would open the door to a deeper retracement toward prior lows, keeping the near-term bias tilted to the downside while price trades beneath the clustered daily resistance band.
(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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