The price of a troy ounce rose to $4,800 on Wednesday, with the local trend gaining strength. The precious metal is supported by expectations of a possible deal between the United States and Iran, which would reduce the risks of an energy-driven inflation shock.
Press reports indicate that Washington and Tehran are working to organize a new round of negotiations after the breakdown of dialogue over the weekend. At the same time, the United States maintains a naval blockade of Iranian oil supplies through the Strait of Hormuz. Iran is reportedly considering temporarily suspending exports through this route to advance negotiations.
An additional supporting factor is the drop in oil prices below $90.00 per barrel and the weakening of the US dollar to six-week lows. Both developments traditionally drive demand for gold.
Markets are also reviewing their monetary policy expectations. The Federal Reserve is taking a wait-and-see approach in assessing inflation risks, which is reducing pressure on precious metals.
Technical analysis
On the H4 chart, the market is forming a consolidation range around the $4,772 level. A breakout to the upside would open potential for a correction to $4,903. A break lower could mark the beginning of a downward wave to $4,460. The MACD indicator confirms the current bullish momentum, with its signal line above the center line and pointing firmly upwards.
On the H1 chart, the market broke through the $4,775 level and completed a wave to $4,868. A correction to the $4,775 level is likely (testing from above), followed by a possible rise to $4,903. The stochastic oscillator supports this scenario as its signal line remains below the 20 level and shows bullish pressure towards 80.
Conclusion
Gold is trading in positive territory as hopes of a renewed US-Iran negotiating effort ease concerns about an energy-driven inflation shock. The combination of falling oil prices (below $90.00 per barrel), a weaker dollar (at six-week lows), and the Federal Reserve's patient stance on inflation risks has created a conducive environment for the precious metal. While the United States maintains a naval blockade and Iran considers suspending exports to advance talks, the market is cautiously optimistic. Technical indicators suggest further upside potential towards $4,903, although any setback in diplomatic efforts could quickly reverse the current momentum.
By RoboForex Analysis Department
Disclaimer:
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
