Gold surges as Trump signals weekend Iran accord
- Trump says US-Iran agreement could arrive as soon as weekend.
- FARS report suggests Tehran may approve Iran’s proposed text.
- Hot PPI keeps Fed hike risk alive despite Dollar weakness.
Gold prices rally sharply on Thursday after US President Donald Trump revealed that the US and Iran are close to agreeing on a deal, which weakened the US Dollar and underpinned the yellow metal, trimming some of Wednesday’s losses. The XAU/USD trades at $4,212, up 3.50%
XAU/USD rebounds sharply as Dollar sinks on diplomacy breakthrough
US President Donald Trump recently said the US and Iran could sign a deal as soon as the weekend, which could open the traffic through the Strait of Hormuz. Iran’s linked FARS news agency revealed that “it seems that given that the United States has accepted the text proposed by Iran, the likelihood of this text being approved by the main authorities of the system is high.”
Meanwhile, the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of currencies, dives 0.42%, down to 99.66, a tailwind for the non-yielding metal.
US inflation data showed that produce prices increased by 6.5% YoY in May, higher than April’s 5.7% and the forecast of 6.4%. The core Producer Price Index (PPI), excluding energy and food, grew by 4.9% YoY, which is below the consensus of 5.4% and unchanged from April.
Worth noting that today’s PPI report, along with the CPI revealed a day ago, kept investors' expectations for a rate increase by the Federal Reserve towards the end of 2026, according to Prime Terminal data.
The US economic schedule also included job figures as Initial Jobless Claims for the week ending June 6 rose by 229K, exceeding the 219K expected by analysts.
Ahead in the week, the US economic docket will feature the release of the University of Michigan Consumer Sentiment for June on its preliminary reading, ahead of the Federal Reserve's monetary policy
XAU/USD technical outlook: Gold rises past $4,200 on US-Iran war deal
Gold has shifted bearish after reaching a six-month low of $4,023, with sellers driving the price below the previous low of $4,098, opening the door to further downside. Momentum favors further downside, as indicated by the Relative Strength Index (RSI), which is oversold yet shy of the most extreme level below the 20 area. Hence, the downtrend remains intact, and further losses are expected.
If bullion prices plummet below $4,000, the next significant support level from supply and demand dynamics is the October 28, 2025, swing low at $3,886.
Upwards, XAU/USD must reclaim the 200-day Simple Moving Average (SMA) at $4,443, paving the way to test $4,500.
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
Christian Borjon Valencia
FXStreet
Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.
