FX.co ★ XAU/USD. Price Analysis and Forecast

Gold (XAU/USD) is attempting to hold its ground but is failing to stay above the key level of $4,800. Global investor risk appetite is increasing amid hopes of de-escalation in the Middle East conflict, triggering a broad sell-off in the U.S. dollar and allowing the precious metal to extend its overnight rebound from the $4,600 level, where the 200-day SMA was located.

The U.S. Dollar Index (DXY) dropped to the 100-day SMA, which lies below the round level of 99.00, following reports of a ceasefire between Washington and Tehran. U.S. President Donald Trump, addressing followers on Truth Social, promised to suspend preparations for airstrikes on Iran for 14 days, provided there is a full, immediate, and secure reopening of the Strait of Hormuz. Iran officially confirmed acceptance of the two-week ceasefire, and negotiations are set to begin Friday in Islamabad, Pakistan. As a result, investor confidence has improved, undermining the U.S. dollar and benefiting gold prices.

Iran's Foreign Minister, Seyed Abbas Araghchi, added that safe passage through the strategic route would be ensured over the two-week period, which immediately caused oil prices to plunge.

Reduced energy-driven inflation pressure is easing expectations for Federal Reserve rate hikes and lowering U.S. Treasury yields. This is another factor weighing on the dollar and providing additional support to gold.

However, the lack of further buying calls for some caution among XAU/USD bulls before establishing positions for continued growth. From a technical perspective, bulls need to break above the 50-day SMA to fully take control of the market. The next target would be the round level of $5,000. However, oscillators have not yet moved into positive territory, signaling that bulls still lack sufficient momentum for a sustained rally.

The nearest support is now the 20-day SMA around the $4,700 level, while the closest resistance is the round level of $4,800.