Gold Price Analysis: Revival of reflation trades amid US stimulus hopes boosts XAU/USD

FXStreet Team FXStreet

Gold (XAU/USD) extends its recovery from two-month lows of $1785 into the third straight session on Tuesday, backed by the revival of the reflation trades amid growing optimism on the passage of a $1.9 trillion stimulus package in the US Congress. A bullish breakout may be imminent, FXStreet’s Dhwani Mehta briefs.

Key quotes

“The prospects of a bigger US fiscal stimulus and the Fed’s continuation of the ultra-easy monetary policy will keep the gold bulls underpinned, as markets look forward to fresh updates on the stimulus front amid a lack of relevant US economic data slated for release on Tuesday. Although the surge in US Treasury yields amid increasing US inflation expectations could likely cap the advance in the yieldless gold.”

“Gold is battling the bearish 100-simple moving average (SMA) at $1843. Acceptance above the latter could expose the falling wedge resistance at $1844. A sustained move higher above that level would confirm the upside break, opening doors for a test of the horizontal 200-SMA barrier at $1853.”

“The 50-SMA at $1834 could offer immediate support to the XAU bulls, below which the 21-SMA support at $1814 would be put to test. Further south, Friday’s low of $1792 could be the last resort for the gold buyers.”

Author

FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

GBP/USD drops to multi-week lows below 1.3300

GBP/USD sets aside Friday’s uptick and breaches below the 1.3300 yardstcik on Monday to hit new multi-week troughs. Falling crude oil prices following a pause in the Middle East conflict in combination with the recent soft reading in UK inflation appear to play against any BoE tightening ahead of the bank’s event later in the week.

EUR/USD advances marginally around 1.1380

EUR/USD loses bullish momentum and slips back below the 1.1400 region at the beginning of the week. Hopes of a de-escalation in the Middle East appears to lend support to the pair, although uncertainty persists over whether the US and Iran can reach a lasting solution.

Gold struggles to extend gains beyond $4,100

Spot Gold gapped higher at the beginning of the new week, as a pause in Middle East hostilities underpinned the mood and weighed on the US Dollar (USD). The XAU/USD pair traded as high as $4,116.20 during Asian trading hours, following a pause in strikes between Iran and the United States (US).

Bitcoin holds above key support amid ETF inflows, US-Iran bombing pause

Bitcoin (BTC) holds above the key 200-week Simple Moving Average (SMA) around $63,500, having posted four consecutive weeks of gains. Institutional demand shows mild signs of improvement with spot Exchange Traded Funds (ETFs) posting inflows for a third consecutive week.

Bitcoin options traders are dropping their hedges going into the Fed meeting

Bitcoin's options market has turned notably less defensive over the past month, unwinding the downside protection traders built up in June just as the Federal Reserve prepares to meet.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.