Gold retains intraday bullish bias as Iran peace deal hopes keep USD depressed
- Gold kicks off the new week on a positive note as US-Iran peace deal hopes undermine the USD.
- The US and Iran remain at odds over key issues, helping limit USD losses amid hawkish Fed bets.
- The technical setup warrants caution for bulls before positioning for further appreciation.
Gold (XAU/USD) remains well bid above the $4,550 level through the first half of the European session on Monday, albeit it remains below the top boundary of a nearly one-week-old range amid mixed fundamental cues. Developments over the weekend spurred hopes for a potential US-Iran peace deal, undermining the US Dollar's (USD) reserve currency status and lending support to the commodity. The US and Iran, however, remain at odds over key issues. This, along with hawkish US Federal Reserve (Fed) expectations, helps limit the USD losses and keeps a lid on any further gains for the non-yielding yellow metal.
Axios reported late Saturday, citing a US official, that the US and Iran are close to signing an agreement that involves a 60-day ceasefire extension during which the Strait of Hormuz would be reopened. Adding to this, US President Donald Trump said that the framework for a peace deal with Iran was largely negotiated. This boosts investors' confidence and the resultant slump in Crude Oil prices ease inflationary fears, triggering a steep decline in US Treasury bond yields amid relatively thin liquidity as many global markets are closed for holidays. This, in turn, is seen weighing heavily on the Greenback.
Meanwhile, Trump explicitly instructed his representatives not to rush into a deal with Iran and said that a naval blockade of Iranian ports will remain in effect until a formal, certified agreement is signed. Furthermore, major disagreements over Iran's nuclear program should cap the optimism. Moreover, bets that the US Fed will hike interest rates in 2026 could act as a tailwind for the USD. This, in turn, makes it prudent to wait for some follow-through buying before confirming that the Gold has formed a near-term bottom around the $4,450 area, or its lowest level since late March, touched last week.
XAU/USD 4-hour chart
Gold needs to surpass range hurdle near $4,590 to back case for further gains
From a technical perspective, the XAU/USD pair holds within a downward parallel channel. The channel ceiling coincides with the 200-period Exponential Moving Average (EMA) on the 4-hour chart, forming a cluster resistance near the $4,650 area, suggesting that rallies remain vulnerable despite the positive undertone in momentum. The Moving Average Convergence Divergence (MACD) is above zero, and the histogram is still positive. Moreover, the Relative Strength Index (RSI) hovers in the mid-50s, hinting at a tentative recovery rather than a clear trend shift.
On the downside, the lower boundary of the parallel channel around $4,360 marks the next key support area. A break beneath this floor would reinforce the broader bearish structure and open the door to a deeper correction within the medium-term downtrend.
(The technical analysis of this story was written with the help of an AI tool.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
