$4,300 reclaimed: Gold bounces as US-Iran peace deal signing offsets Fed’s hawkish hold
- Gold is reversing the previous slump early Wednesday, regaining $4,300 after finding fresh buyers near $4,250.
- The US Dollar retreats as US-Iran peace deal optimism overshadows hawkish Fed outlook.
- Technically, Gold needs a sustained break above the 21-day SMA near $4,390 to revive the recovery.
Gold is recouping losses above $4,300 in Thursday’s Asian session as the dust settles in the aftermath of the US Federal Reserve (Fed) monetary policy decision and the signing of the US-Iran peace deal.
Gold capitalizes on the US-Iran peace deal
Gold is breathing a sigh of relief as markets finally cheer a confirmation of the end of the nearly four-month-long war between the United States (US) and Iran and the reopening of the Strait of Hormuz.
Renewed market optimism is diminishing the US Dollar’s (USD) safe-haven appeal, helping USD-denominated bullion recover almost the entire previous slide.
Earlier on, US President Donald Trump electronically signed the memorandum of understanding (MoU) aimed at ending the war with Iran, a White House official told Reuters.
Further, Iran's Foreign Ministry spokesman confirmed that the text of the Iran–US MoU has been officially finalized, as both sides have signed it.
On Wednesday, Gold was battered by the Fed’s hawkish stance on interest rates, after facing rejection just shy of the $4,400 barrier.
The Fed held the benchmark policy rates between 3.5%-3.75%, as widely expected. But the updated Summary of Economic Projections (SEP), the so-called dot plot chart, showed a major hawkish shift, with nine Fed officials forecasting at least one interest rate increase this year.
The central bank also removed language from its monetary policy statement that had suggested its next move would be a rate cut.
At his first post-policy meeting press conference, Chairman Kevin Warsh said that the Fed has also removed “forward guidance” from its statement, adding that “I did not submit a dot. For me, it’s not helpful in the conduct of policy.”
The FOMC press conference maintained a steady tone, with the FXS Speechtracker score at 6/10, in line with the historical average and signaling no major hawkish or dovish surprise relative to the established baseline. The repeated emphasis that 2% inflation remains the long-held objective, that there is “no reason” to revisit the target until it is delivered, and that inflation is primarily driven by monetary policy underscores a firm commitment to a restrictive stance that is broadly supportive for the Dollar. At the same time, the explicit abandonment of forward guidance and the admission that policymakers do not feel bound by the dots highlight a shift toward data dependence and market-driven price discovery, which may inject more volatility into Dollar and rate expectations as traders react to incoming data rather than Fed signaling.
The FXS Fed Sentiment Index fell by 30.92 points to 120.00, indicating a notable pullback in perceived hawkishness even as the index remains well above the neutral 100 mark. This configuration suggests that, while the tone has moderated from recent peaks according to the FXS Speechtracker, the policy stance is still firmly in hawkish territory, consistent with a Fed that is committed to delivering 2% inflation but now relying more on data and market pricing than on explicit forward guidance.
Now, with the Fed and uncertainty around the US-Iran peace deal out of the way, Gold traders will pay close attention to the incoming data, especially after US Retail Sales increased for a fourth straight month, highlighting the economy's resilience.
Later today, the US Jobless Claims report will entertain traders ahead of the Bank of England (BoE) policy announcement.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,312.29, retaining a bearish near-term bias as price holds below the 21-day, 50-day, 100-day and 200-day simple moving averages (SMAs). The clustering of these SMAs between roughly $4,390 and $4,735 suggests that recent rebounds remain corrective within a broader downside phase, while the Relative Strength Index (RSI) near 44 hints at weak but not extreme selling pressure.
On the topside, initial resistance is aligned with the 21-day SMA at about $4,387, ahead of the 200-day SMA near $4,464, which acts as a more structural barrier. Further up, the 50-day SMA around $4,554 and the 100-day SMA close to $4,735 form a wider supply zone that would cap any stronger recovery unless decisively reclaimed; with no clear moving-average support below spot, the metal remains vulnerable to fresh lows while it trades under these overlapped resistance layers.
(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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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
