Gold Price Forecast: Acceptance above 21-day SMA at $4,065 is critical for XAU/USD buyers
- Gold extends rebound into a third straight day on Tuesday, capitalizing on Oil price pullback.
- The US Dollar hangs close to weekly highs amid US-Iran uncertainty and Fed rate hike bets.
- Gold’s recovery appears limited as an impending Bear Cross looms on the daily chart.
Gold is building on its recovery from two-week lows of $4,024 reached last Friday, extending the winning streak into a third straight day on Tuesday.
Gold sees a relief rally on Oil pullback
Gold is capitalizing on the ongoing pullback in Oil prices from monthly highs near $84.50. The black gold is retreating for a second day in a row on emerging signs of diplomatic efforts to ease the US-Iran conflict.
Iran's Foreign Ministry spokesperson said Monday that mediators had presented "proposals" to Tehran, keeping diplomacy hopes alive.
Meanwhile, speaking to CNN, US Secretary of State Marco Rubio said: “We are receiving signals through multiple channels of Iran’s desire to negotiate, but there is a growing split within the regime."
This willingness for mediation from both sides come even as US and Iran continue to exchange military strikes, while Yemen’s Iran-backed Houthi rebels announced a maritime blockade Saudi Arabia after the two sides traded fire last week for the first time in years.
Additionally, the optimism around Gold is also due to an Axios report, stating that US President Donald Trump is nearing a decision between a 10-day ceasefire to reopen the Strait of Hormuz and a full-scale joint campaign with Israel against Iran, with US forces massing in the region as talks continue.
But for now, the focus seems to be on diplomatic efforts, especially as the Middle East crisis is expected to feature prominently in the talks of foreign ministers from the 11-member Association of Southeast Asian Nations in Manila, Philippines.
Looking ahead, the developments around the US-Iran potential ceasefire remain a key driver for Gold traders, as the US economic docket lacks any high-impact data releases.
However, Gold’s daily technical setup continues to caution buyers as an impending Bear Cross remains in play, while the momentum stays negative.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,046.08, holding below all its major moving averages, which keeps the near-term bias bearish. The 21-day simple moving average (SMA) at $4,063.52 forms immediate resistance just overhead, with the 50-day SMA at $4,263.77 reinforcing a broader cap on the upside. Longer-term trend metrics remain stacked above price, as the 200-day SMA at $4,495.83 and the 100-day SMA at $4,510.55 both sit well above the market, while a Relative Strength Index (14) reading near 44 suggests only modest, corrective momentum rather than a decisive bullish reversal.
Additionally, keeping the near-term bearish outlook intact, the 100-day SMA is on the verge of crossing the 200-day SMA from above. If that happens on a daily candlestick closing basis, it would confirm a Bear Cross.
On the topside, a sustained recovery through the nearby $4,063.52 21-day SMA would be the first signal that bears are losing control, exposing the next resistance area at the $4,263.77 50-day SMA. Beyond that, the $4,495.83 200-day SMA and $4,510.55 100-day SMA define a dense, higher barrier that would likely cap any extended rebound for now. On the downside, with no clear moving-average or structural levels immediately below the current price, traders will look to the recent lows as tentative support, while the prevailing configuration of overhead averages suggests that rallies could continue to be sold until at least the 21-day SMA is convincingly reclaimed.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
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.
