Gold (XAU/USD) touches a fresh daily low during the first half of the European session and retreats further from a nearly four-week high, touched earlier this Wednesday. Given that the path to a durable US-Iran agreement remains uncertain on the back of the instability in the Strait of Hormuz, the US Dollar (USD) stages a modest recovery from its lowest level since early March and undermines the commodity. In fact, Iran’s ambassador to the UN described the US blockade, which took effect on Monday, as a grave violation of Tehran’s sovereignty.
Moreover, Iran’s Islamic Revolutionary Guard Corps (IRGC) has vowed to retaliate, keeping geopolitical risks in play. This, in turn, benefits the USD’s reserve currency status and exerts some downward pressure on the Gold price. Investors, however, remain hopeful that the door for Iran diplomacy remains open. Furthermore, diminishing odds for a rate hike by the US Federal Reserve (Fed) should keep a lid on any meaningful USD recovery. This, in turn, offers some support to the non-yielding yellow metal and helps limit deeper losses, warranting some caution for aggressive bearish traders.
US Vice President JD Vance, speaking at a public event, again struck a cautiously optimistic tone and said that Washington is pursuing a broader grand bargain aimed at reshaping Iran’s economic integration with the world. Furthermore, United Nations (UN) Secretary-General António Guterres told reporters on Tuesday that the resumption of US-Iran talks is highly probable. The optimism over diplomatic efforts to extend the US-Iran ceasefire has been a key factor behind the recent USD decline over the past two weeks or so, and assist the Gold price to hold above the $4,800 mark.
Data released on Tuesday showed that the US Producer Price Index (PPI) rose to 4% on a yearly basis in March from 3.4% in the previous month. On a monthly basis, the PPI climbed 0.5%, while the gauge excluding Food & Energy was up 3.8% YoY in March. These readings fell short of consensus estimates and eased concerns about the inflationary impact of the war-driven surge in energy prices, tempering hawkish expectations. The resultant decline in US Treasury bond yields should contribute to capping the USD and back the case for the emergence of dip-buyers around the Gold.
XAU/USD 4-hour chart
Gold bears look to regain control following an intraday failure near 200-SMA on H4
The XAU/USD pair is holding a constructive bullish bias and looking to build on momentum beyond the 200-period Simple Moving Average (SMA) pivotal resistance on the 4-hour chart. Meanwhile, momentum remains strong, with the Relative Strength Index (RSI) at 65.5, edging toward overbought territory, and the Moving Average Convergence Divergence (MACD) rising in positive territory. This hints that bullish pressure persists but may be vulnerable to fatigue on further gains.
In the meantime, initial resistance is seen at the 61.8% Fibonacci retracement level at $4,912.54, and a sustained break above this level would open the way toward the 78.6% retracement at $5,134.37, ahead of the cycle high at $5,416.94. On the downside, the 50% retracement level of the March downfall reinforces the underlying floor at $4,756.73. A convincing break below this would expose deeper supports at the 38.2% retracement level at $4,600.92 and the 23.6% level at $4,408.14, where buyers would be expected to regroup on a more pronounced correction.
(The technical analysis of this story was written with the help of an AI tool.)
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