Gold Price Forecast: XAU/USD looks to regain $4,600 on US-Iran peace deal prospects
- Gold rebounds sharply toward $4,600 in Monday’s Asian trades, following a down week.
- The US Dollar tumbles on hopes for a US-Iran peace deal, the Strait of Hormuz reopening.
- Gold buyers look to take out the $4,610-$4,650 resistance zone, but bearish RSI warrants caution.
Gold is staging a solid comeback in early Asia on Monday, recapturing the $4,550 barrier on its way to $4,600, while reversing last week’s decline.
Gold: Eyes on evolving US-Iran peace deal
The US Dollar (USD) is wilting on fresh hopes for a peace deal between the United States (US) and Iran, allowing the bullion to recover ground.
Over the weekend, several American media outlets reported that the two countries were close to signing a deal that involves a 60-day ceasefire extension and an in-principle agreement to the reopening of the Strait of Hormuz.
Although US President Donald Trump was quick to clarify that the deal is “not isn’t even fully negotiated yet, as sticking points remain over Iran’s nuclear program and the Strait. Meanwhile, "Iran has indicated its reported understanding with the US to halt the regional war would include Lebanon," according to The Guardian.
Despite the evolving US-Iran peace talks, optimism prevails across the financial markets that a potential deal could be reached in the coming days, which could lead to the clear passage of maritime traffic through the Strait.
The renewed hopes of the Strait reopening have already smashed Oil prices to over 5% and fuelled a risk-on market environment.
With further progress on the talks, inflation concerns could ease alongside the retracement in Oil prices, thereby alleviating the pressure of the US Federal Reserve (Fed) to opt for an interest rate hike this year.
This narrative is boding well for riskier assets and the non-yielding Gold at the expense of the current go-to safety bet and the reserve currency, the USD.
In the day ahead, the US-Iran headlines will be closely followed for fresh trading incentives in the Gold price. However, the bright metal could be subject to intense volatility and exaggerated moves as the US stock and bond markets remain closed this Monday for Memorial Day.
In the daily chart, XAU/USD trades at $4,578.87. The metal remains capped in the short term, with price lodged below the 21-day, 50-day and 100-day simple moving averages, which together suggest that rallies are likely to face supply before the broader uptrend resumes. The 14-day Relative Strength Index near 46 keeps momentum mildly negative, hinting that recent bounces are corrective rather than the start of a sustained advance.
On the topside, initial resistance emerges at the 21-day SMA around $4,608.80, followed by the 50-day SMA near $4,658.06, while the 100-day SMA at roughly $4,800.98 marks a higher barrier if buyers regain traction. On the downside, prior trend-line (falling wedge resistance-turned-support) interaction and nearby structure leave the broader support zone leaning toward the mid-$4,300 area, with the 200-day SMA at about $4,382.09 acting as a more substantial floor should sellers extend the current pullback.
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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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.
