Gold clings to gains amid sustained safe-haven flows ahead of US-Iran talks
- Gold trades with a positive bias for the second straight day amid a combination of supporting factors.
- Trade uncertainties and geopolitical risks ahead of US-Iran talks continue to underpin the commodity.
- A modest USD weakness and bets for more Fed rate cuts further benefit the non-yielding XAU/USD.
Gold (XAU/USD) sticks to its modest intraday gains through the first half of the European session on Thursday, with bulls still awaiting a sustained move and acceptance above the $5,200 mark before placing fresh bets. Persistent uncertainties over US President Donald Trump's trade policies and geopolitical tensions ahead of US-Iran nuclear talks turn out to be key factors acting as a tailwind for the safe-haven precious metal.
Following the Supreme Court's verdict to block many of Trump's sweeping import taxes on Friday, the president invoked Section 122 of the Tariff Act 1974 to levy 10% additional tariffs. Trump then said on Saturday that the rate would be 15%, though the tariffs were set at the lower rate from Tuesday. However, a White House official said the administration is working to raise it to 15%. There is also anxiety over how long this rate will continue, given Trump's mercurial turns over tariffs, keeping investors on edge and underpinning the Gold.
Meanwhile, Iran and the US are scheduled to hold the third round of talks aimed at resolving the longstanding nuclear dispute amid the risk of imminent US strikes following a large-scale buildup of American forces in the Middle East. In his State of the Union speech on Tuesday, Trump laid out his case for a possible attack on Iran and said he would not allow the world's biggest sponsor of terrorism to have a nuclear weapon. This keeps geopolitical risks in play and turns out to be another factor acting as a tailwind for the safe-haven Gold.
Adding to this, a modest US Dollar (USD) weakness lends additional support to the commodity and contributes to the bid tone. Despite the Federal Reserve's (Fed) hawkish outlook, traders are still pricing in the possibility of three 25-basis-point (bps) rate cuts by the US central bank. Moreover, concerns about retaliatory measures to Trump's tariffs and the potential economic fallout from disruptions to global supply chains keep the USD bulls on the defensive. This, in turn, backs the case for a further near-term appreciating move for the Gold.
XAU/USD 4-hour chart
Gold seems poised to appreciate further while above the $5,100 resistance breakpoint
The recent breakout through the $5,100-mark horizontal barrier was seen as a key trigger for the XAU/USD bulls. The positive outlook is reaffirmed by the fact that the bullion holds above the rising 200-period Simple Moving Average (SMA) near $4,948, which keeps the broader upward structure intact despite the latest pullback from last week’s highs.
The Relative Strength Index (RSI) hovers around 59, above the 50 midline, which suggests underlying buying pressure remains in place rather than a full loss of momentum. However, the Moving Average Convergence Divergence (MACD) has slipped further into negative territory with the line below the Signal line and a negative histogram, pointing to fading upside momentum and warning that bulls lack strong conviction at current levels.
Initial support emerges near $5,150, where recent lows align with the short-term consolidation floor, followed by a deeper cushion at $5,100 if sellers extend the correction. A break below $5,100 would expose the $5,050 area, though the rising 200-period SMA below $4,950 is expected to underpin the broader bullish context while it holds.
On the upside, immediate resistance sits around $5,220, just beneath the recent swing high, with a clear break opening the path toward $5,260. A sustained move above $5,260 would signal renewed bullish momentum and shift the focus to higher highs in the coming sessions.
(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.
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
