Gold surges 2% since week opening amid geopolitical shifts and Fed expectations

On Wednesday, spot gold (XAUUSD) hovered near 4,342 USD per troy ounce, logging a solid gain of over 2% since the beginning of the trading week. The precious metal continues to find strong fundamental support as global market participants increasingly price in a potential landmark peace agreement between the United States and Iran.

The geopolitical breakthrough is expected to lead to the full restoration of oil shipments via the strategic Strait of Hormuz, substantially lowering broader market anxieties regarding a renewed global inflationary spiral. Analysts anticipate that both nations will sign an interim accord in Switzerland as early as Friday. Preliminary details suggest the document encompasses major economic concessions for Iran, most notably the lifting of restrictions on crude oil exports.

In parallel to geopolitical developments, global investors remain intensely focused on the upcoming Federal Reserve monetary policy conclusion. While the market is almost fully pricing in unchanged interest rates, significant attention will be dedicated to the forward guidance and press conference delivered by the newly appointed Fed Chair, Kevin Warsh. His perspective on the future trajectory of monetary policy will be vital in setting expectations for the remainder of the year.

It is worth noting that other major central banks have already delivered their decisions this week. The Reserve Bank of Australia (RBA) opted to maintain its benchmark cash rate at 4.35%. In contrast, the Bank of Japan (BoJ) delivered a historic 25-basis-point hike, pushing its key policy rate to 1.0%—the highest level recorded since 1995.

For the gold market, the primary macroeconomic drivers continue to revolve around global central bank rate expectations, the performance of the US Dollar, and the fluid situation surrounding the US-Iran accord. Should geopolitical tensions continue to dissipate, investor focus is highly likely to pivot entirely back to the Federal Reserve's policy roadmap and long-term global inflation projections.

XAU/USD technical analysis

On the 4-hour chart, the XAUUSD pair has developed a distinct consolidation range centered around the 4,343 baseline level. The immediate tactical outlook projects a downside breakout from this range, targeting an initial drop toward 4,188.

Following the completion of this wave, the market may see a corrective recovery wave pointing to 4,277, before resuming its primary downtrend toward 4,088. The overarching trend continuation target sits at the psychological level of 4,000.

Technical Confirmation: The MACD indicator heavily supports this downward momentum. Its signal line is currently positioned at local highs well above the zero baseline and is pointing firmly downward, confirming a dominant bearish momentum.

On the 1-hour chart, the market has successfully breached the support baseline at 4,348 downward, completing an initial wave of decline toward the 4,308 mark. Looking forward, the intraday bias favors a brief corrective bounce toward 4,354 to test the broken level from below.

Following this potential retest, a continuation of the bearish structure is expected to target 4,188, with a subsequent corrective growth expected back to 4,270.

Technical Confirmation: This intraday scenario is further validated by the Stochastic oscillator, where the signal line remains suppressed below the 50 median mark and continues to face selling pressure, pointing down toward the 20 oversold threshold.