Gold Price Forecast: Acceptance above 50-day SMA or $4,900 critical to sustain uptrend
- Gold snaps two-day recovery early Wednesday, retreating from monthly highs near $4,870.
- The US Dollar finds its feet after crumbling to six-week lows, despite hopes of diplomacy in the Iran war.
- 50-day SMA appears to be a tough nut to crack for Gold buyers amid a Bear Cross, while RSI holds just above the midline.
Gold is pulling back from four-week highs of $4,871 set earlier in the Asian session on Wednesday, as buyers take a breather, weighing the likelihood of a peace deal reached at the upcoming talks between the United States (US) and Iran.
Gold buyers turn hesitant as US-Iran talks loom
A cautious optimism prevails in Asia on Wednesday. Following US President Donald Trump’s comments that US-Iran peace talks could resume in the next two days.
Trump also noted that “I view it (the Iran war) as very close to over.”
Additionally, US Vice President JD Vance’s remarks reinforced the sentiment, as he stated that “talks, taking place via channels including Pakistan, will continue as both sides work toward a deal.”
Furthermore, emerging signs of stabilization in the Strait of Hormuz, amid the US naval blockade, and the resultant retracement in Oil prices have eased inflation concerns, contributing to the market optimism.
Despite the recent recovery in risk sentiment, markets could opt to remain on a cautious footing ahead of the second round of US-Iran peace talks.
There are reports that a ceasefire extension could be discussed during the resumption of the talks.
Meanwhile, CNN News reviewed satellite imagery, which showed that Iran is moving to restore access to its underground missile infrastructure during the ceasefire, underscoring the temporary nature of the pause and the risk of renewed conflict.
Against this backdrop, markets remain wary heading into the Iran talks, reviving the haven demand for the US Dollar (USD) while checking the Gold price upside.
All eyes continue to remain on the Mideast geopolitical developments for the next big move in Gold.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD is holding above the 21-day and 100-day simple moving averages (SMAs) at roughly $4,659 and $4,702, which underpins a cautiously constructive tone even after the recent pullback. However, the metal now sits beneath the broken rising trend-line area near $4,841 and the 50-day SMA at about $4,901, leaving the broader advance capped, while the 14-day Relative Strength Index around 53 suggests only modest, non-exhaustive bullish momentum.
Meanwhile, a 21-day SMA and 100-day SMA Bear Cross confirmed on April 13 also threatens Gold's bullish attempts.
On the topside, initial resistance is located around the former trend-line support at $4,841, followed by the 50-day SMA near $4,901, where sellers are likely to defend the recent consolidation band. On the downside, immediate support emerges at the 100-day SMA around $4,702, with the 21-day SMA near $4,659 providing a secondary floor ahead of the more distant 200-day SMA near $4,201, which defines the base of the broader uptrend.
(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.
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.
