Gold sticks to gains below four-week top as Iran diplomacy hopes and Fed bets weigh on USD

• Gold regains some positive traction following the previous day’s pullback from a four-week top.
• Iran diplomacy hopes and fading Fed rate hike bets undermine the USD, supporting the bullion.
• Hormuz risks could limit deeper losses for the safe-haven USD and keep a lid on the commodity.

Gold (XAU/USD) retains its positive bias through the Asian session on Thursday and currently trades around the $4,835 region, well within striking distance of a nearly four-week high set the previous day. Investors continue to move toward riskier assets amid hopes that the door for Iran diplomacy remains open, which is seen as undermining the US Dollar’s (USD) reserve currency status and benefiting the commodity.

US President Donald Trump said that he believes the war with Iran may be coming to a conclusion soon, while the White House expressed optimism about reaching a deal to end the conflict. Moreover, reports suggest that there are growing prospects for a second round of peace talks between the US and Iran that could take place in a matter of days. The optimism, in turn, remains supportive of the upbeat market mood and dents the safe-haven premium. Adding to this, diminishing odds for a rate hike by the US Federal Reserve (Fed) contribute to the bearish sentiment surrounding the USD and further lend support to the non-yielding Gold.

Expectations for diplomatic efforts to end the conflict keep Crude Oil prices well within striking distance of a three-week low set on Tuesday. Moreover, the US Producer Price Index (PPI) released earlier this week eased concerns about the inflationary impact of the war-driven surge in energy prices and tempered hawkish Fed expectations. According to the CME Group’s FedWatch Tool, late 2026 remains the primary window for potential easing by the US central bank. This, in turn, drags the USD Index (DXY), which tracks the Greenback against a basket of currencies, to its lowest level since late February and backs the case for additional gains for the Gold.

Meanwhile, the US naval blockade of Iranian ports, imposed after the end of the Islamabad talks last Saturday, has been fully implemented. Moreover, the leader of Iran’s joint military command said that its military could halt trade in the Gulf region if the US does not lift its blockade. Iran has also demanded an end to Israeli attacks on Lebanon as a precondition for further talks with the US. However, Israel’s Prime Minister, Benjamin Netanyahu, indicated that he had not committed to a ceasefire and said that he instructed the IDF to continue thickening the security zone. This keeps geopolitical risks in play, which should limit USD losses and cap gains for the Gold.

XAU/USD 4-hour chart

Gold bulls await breakout above 200-SMA pivotal hurdle on H4 before positioning for further gains

The XAU/USD pair remains just under the 200-period Simple Moving Average (SMA) at $4,831.22, which acts as immediate overhead resistance and keeps the rebound in check. Meanwhile, the Moving Average Convergence Divergence (MACD) has turned positive, and the Relative Strength Index (RSI) hovers near 60. This hints at firm but not overheated bullish momentum that has yet to overpower the prevailing structural cap.

Hence, it will be prudent to wait for sustained strength and acceptance above the 200-SMA barrier before positioning for further gains to $4,916.20, or the 61.8% Fibonacci retracement level of the March downfall. A sustained break above the latter would be needed to ease the current ceiling and open the way toward $5,136.01 and then the cycle high area around $5,416.01.

On the downside, first support is aligned with the 50% retracement at $4,761.81, with additional layers of demand at the 38.2% Fibo. level near $4,607.41 and the 23.6% Fibo. around $4,416.39. The said support level would come into play if sellers regain control beneath the current consolidation.

Register a Revolut Business Account