Prices rose more than 4% on Wednesday, approaching $4,690 per ounce amid signs of easing tensions in the Middle East. Expectations of easing tension could lead to a drop in oil prices and reduced concerns about further tightening of central bank policy.
Donald Trump stated that he was willing to end the conflict with Iran even with the Strait of Hormuz partially closed. Separately, reports emerged that Iranian President Masoud Pezeshkian could consider ending the conflict under certain conditions.
However, the increase remains limited. Reducing geopolitical risks dampen demand for safe-haven assets, while a strong dollar and high government bond yields continue to pressure the metal.
In March, gold lost more than 13%, its steepest monthly drop since October 2008. The precious metal now remains about 19% below its January highs. Looking ahead, its dynamics will depend on US macroeconomic data and signals from the Federal Reserve on interest rates.
Technical analysis
On the H4 XAU/USD chart, the market is forming a consolidation range around the $4,656 level. A breakout to the upside would open potential for a correction to $4,848. A break lower could mark the beginning of a downward wave towards $4,750. The MACD indicator confirms the current momentum, with its signal line above the center line and pointing strictly upwards.
According to the H1 chart, the market has broken through the USD 4,682 level and is forming a wave towards USD 4,855. Looking ahead, a corrective move back to $4,490 will be considered, followed by an expected rise to $4,900. The stochastic oscillator supports this scenario, with its signal line remaining above the 20 level and showing bullish pressure towards 80.
Conclusion
The strong rally reflects growing market optimism about a possible reduction in tensions in the Middle East, with signals from both US and Iranian leaders suggesting a possible path to ending the conflict. However, the metal's advance remains limited by a corresponding decline in safe-haven demand, coupled with persistent headwinds from a strong dollar and high bond yields.
Having suffered its worst monthly loss since 2008 in March, gold now faces a crucial moment in which further gains will likely depend on whether easing geopolitical tensions translates into a sustained shift in central bank policy expectations. Technical indicators point to a near-term rise, although the broader trend remains fragile.
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.
