Gold Forecast: XAU/USD rebounds on Mideast peace hopes, will it last?
Gold is rallying hard in Asia on Wednesday, reclaiming the $4,600 barrier while extending its recovery from over one-month lows of $4,501 set on Tuesday.
Gold rejoices the US-Iran de-escalation hope
Gold is capitalizing on a return of risk appetite, and there in, reduced haven demand for the US Dollar (USD) as optimism over a likely peace deal between the United States (US) and Iran bolsters risk sentiment.
This follows an announcement by US President Donald Trump that he is pausing ‘Project Freedom’, the US effort to guide stranded vessels out of the Strait of Hormuz, citing progress
Meanwhile, US Secretary of State Marco Rubio told Reuters on Tuesday that “Operation Epic Fury is concluded,” adding that “we’re not cheering for an additional situation to occur.”
The Greenback receives another blow from easing inflation fears, led by the recent retreat in Oil prices, which temper bets for hawkish Fed monetary policy outlook.
If markets sense substantial progress on the Mideast peace deal, Gold could see an extension of the recovery rally. Additionally, repositioning ahead of Friday’s US Nonfarm Payrolls (NFP) report could provide extra legs to the renewed upside in Gold.
In the meantime, the US ADP Employment Change data will be eyed for fresh trading incentives, especially after Job Openings declined by 56,000 to 6.866 million by the last day of March, the Bureau of Labor Statistics (BLS) said in its Job Openings and Labor Turnover Survey (JOLTS) report on Tuesday. The market forecast was for 6.83 million.
The US ISM Services Employment Index improved to 48 in April from March’s 45.5.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,645.30. The metal holds below the short- and medium-term moving averages, with the 21-day simple moving average (SMA) near $4,699.78, the 100-day SMA around $4,770.06 and the 50-day SMA close to $4,798.27, keeping the broader tone capped despite a mild rebound from recent lows. The Relative Strength Index (14) at 47.19 sits just under the neutral band, hinting at subdued momentum and suggesting that recovery attempts could struggle while price remains under this layered topside supply.
On the downside, immediate support is aligned with the recently reclaimed falling wedge resistance-line break near $4,594.16, ahead of the former ascending trend-line break around $4,382.94. A sustained drop through these levels would expose the 200-day SMA at approximately $4,299.87 as the next major bearish objective. On the topside, bulls would need a daily close above the falling wedge resistance near $4,595 to confirm a bullish breakout. Up next, reclaiming the 21-day SMA at $4,699.78 is critical to easing near-term bearish pressure, with further resistance then seen at the 100-day SMA around $4,770.06 and the 50-day SMA near $4,798.27.
(The technical analysis of this story was written with the help of an AI tool.)
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.
