Gold holds firm above the $4,650 mark and stays close to a more than one-week high during the European session on Wednesday. The valuable metal continues to benefit from wide US Dollar weakness as hopes for a viable peace agreement between the US and Iran improves market sentiment. The softer USD has helped Gold recover strongly from Monday one-month low near $4,500. In addition falling Crude Oil prices have reduced inflation worries and lowered expectations of a more aggressive stance from the US Federal Reserve (Fed) supporting demand for the non-yielding yellow metal for the second straight day.
US President Donald Trump stated on Tuesday that Project Freedom — the US military mission aimed at leading commercial ships through the Strait of Hormuz — would be temporarily paused to allow time for compromises with Iran. In a post on Truth Social Trump said significant progress had been made toward reaching a final agreement with Iranian agents. Earlier Defense Secretary Pete Hegseth also noted that the US was not looking to increase tensions further and confirmed that the truce between the US and Iran remains in place. Meanwhile Secretary of State Marco Rubio announced the end of the US-led “Operation Epic Fury,” which had been launched jointly with Israel against Iran on February 28.
These developments increased hopefulness that a peace agreement could eventually end the strife and reopen the crucial Strait of Hormuz improving investor confidence and weighing on the USD safe-haven demand. At the same time Crude Oil prices decreased to a one-week low easing concerns about rising inflation and giving the Fed more room to maintain a carful policy approach. However according to the CME Group Fed Watch Tool markets still see more than a 35% chance that the Fed could raise interest rates before the end of the year. This could limit further downside in the USD and cap stronger gains in Gold prices in the near term.
Because of this traders may prefer to wait for stronger buying impetus before confirming that Gold has formed a bottom near the $4,500 level. Market immersion today turns to the US ADP private employment report due later in the North American session. Comments from key FOMC officials and then geopolitical updates may also influence the US Dollar. However the main focus remains on Friday closely watched US Nonfarm Payrolls (NFP) report which could play an important role in adjusting the short-term direction of both the USD and Gold.
From a technical viewpoint Gold reaction from the $4,500 area — near the 50% Fibonacci retracement of the March-April rally — along with the move above the $4,600 level continues to support bullish impetus. The metal is now upcoming the 200-period Simple Moving Average (SMA) around $4,651, which acts as an instant resistance level.
Technical indicators also favor buyers. The relation Strength Index (RSI) remains near 59 indicating positive impetus without entering overbought territory. In addition the Moving Average Convergence Divergence (MACD) indicator remains in positive territory and continues to rise indicating reviving bullish pressure as Gold tests higher resistance levels.
On the downside instant support is found near the 38.2% Fibonacci retracement level around $4,588. A deeper decline could entice buying interest near the 50% retracement at $4,495 followed by the 61.8% retracement around $4,402 if selling stress increases. A clear break below this region would soften the positive outlook and shift short-term momentum back in favor of sellers.
