Gold Price Forecast: XAU/USD remains stuck in range as US-Iran talks grab attention
- Gold struggles below $4,550 early Friday, eyes second straight weekly loss.
- The US Dollar stands tall on rate-hike wagers, US-Iran peace deal uncertainty.
- Gold holds the falling wedge resistance-turned-support at $4,415, while 21-day SMA at $4,615 caps the upside.
- Momentum is bearish, with the key focus now on US-Iran peace talks for a clear direction.
Gold is struggling to sustain this week’s recovery, trading close to $4,550 early Friday after witnessing good two-way business on Thursday.
Gold awaits US-Iran talks for fresh impetus
Gold is facing renewed selling pressure in Asia this Friday as the US Dollar (USD) regains traction as a go-to safe-haven asset, following the previous pullback from six-week highs reached against its major currency rivals.
The Greenback stalled its latest uptrend and retraced sharply in the mid-American session on Thursday after Al-Arabiya carried a report, citing that a final draft of a US–Iran agreement was said to be completed with Pakistani mediation, with an official announcement potentially coming within hours.
Risk flows returned with this report and sent Oil prices lower, allowing Gold to stage a brief comeback. However, markets remain wary over a breakthrough in the US-Iran peace talks as both sides remain at odds over key issues.
“The US and Iran stuck to opposing stances on Thursday over Tehran's uranium stockpile and controls on the Strait of Hormuz, although US Secretary of State Marco Rubio said there had been "some good signs" in talks,” per Reuters.
Despite some optimism, conflicting signals on a peace deal in the Gulf fail to offer clarity on when the Strait of Hormuz might reopen, keeping Oil prices elevated and inflation concerns thriving.
These factors have ramped up the odds of a US Federal Reserve (Fed) interest-rate hike by the end of this year, aiding the USD uptrend, while weighing on any upside attempts in the non-yielding bullion.
That being said, Gold’s fate hinges on the critical outcome of the US-Iran peace talks as traders brace for the swearing-in ceremony of Kevin Warsh as the Fed Chairman by US President Donald Trump later on Friday at the White House.
Later in the North American session, liquidity will thin out heading into the extended weekend as US stock and bond markets remain closed Monday for Memorial Day, with bond markets also closing early Friday.
Therefore, Gold could likely be subject to intense volatility and exaggerated moves amid the end-of-the-week flows and geopolitical headlines in play.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,520.20, holding a capped tone as it sits below the short- and medium-term moving averages while clinging to longer-term support. The 21-day simple moving average (SMA) at $4,615.51 and the 50-day SMA at $4,667.08 form the first band of overhead supply, with the 100-day SMA higher up near $4,798.61, reinforcing the idea of a market still biased lower despite the broader uptrend backdrop suggested by the 200-day SMA at $4,375.93 under price. The Relative Strength Index (14) around 41 leans slightly bearish, hinting that sellers still have an edge, even if downside momentum is not currently extreme.
On the topside, a daily close back above the 21-day SMA at $4,615.51 would be the first sign that bulls are regaining traction, with further resistance emerging at the 50-day SMA around $4,667.08 and then the 100-day SMA near $4,798.61. On the downside, immediate focus remains on the broader support area anchored by the falling wedge resistance-turned-support at $4,415 and the 200-day SMA at $4,375.93; a decisive break below this zone would likely expose deeper losses, whereas holding above it keeps scope for a recovery attempt toward the clustered short-term averages overhead.
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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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.
