Gold Eyes $4,800 as Weaker US Dollar Boosts Bullion Demand
Gold prices extended their rebound on Tuesday, climbing toward the $4,800 level after recovering strongly from below $4,650 in the previous session. Despite stalled US-Iran peace talks over the weekend, investors remain cautiously optimistic that diplomatic negotiations will continue. At the same time, uncertainty surrounding future interest rate moves by the Federal Reserve is weighing on the US Dollar, providing additional support for gold.
Technical Analysis: Gold Faces Key Resistance Near $4,855
Following its recent recovery, a sustained move above the 50% Fibonacci retracement of the March decline could act as a key trigger for bullish momentum in XAU/USD. However, gold remains capped below the 200-period Simple Moving Average (SMA) at $4,854.58, keeping the broader market sentiment slightly bearish.
Momentum indicators show mixed signals. The Relative Strength Index (RSI) hovers around 57, indicating mild bullish bias, while the Moving Average Convergence Divergence (MACD) histogram is approaching the zero line—suggesting that bearish pressure is easing but not fully reversed.
On the upside, immediate resistance is seen at the 200-period SMA near $4,855, followed by the 61.8% Fibonacci retracement at $4,913. A breakout above this level could pave the way for a rally toward $5,133 and potentially the cycle high at $5,413.
On the downside, initial support lies at the 50% Fibonacci level around $4,759, with further support at $4,604 (38.2%) and $4,413. A break below these levels could expose a deeper decline toward $4,104.
Fundamental Outlook: Fed Uncertainty and Geopolitics Drive Gold
Market sentiment remains influenced by a mix of geopolitical tensions and monetary policy expectations. US Vice President JD Vance struck a cautiously optimistic tone regarding negotiations with Iran, noting progress despite the lack of a breakthrough. Hopes for a potential agreement have improved overall risk sentiment, weakening the US Dollar and supporting USD-denominated assets like gold.
Meanwhile, escalating conflict in the Middle East continues to raise concerns over energy-driven inflation. Recent data showed US consumer inflation surged to its highest level in nearly four years in March, largely due to rising energy prices linked to geopolitical tensions.
Despite this, the CME Group’s FedWatch Tool indicates a 30% probability of a 25 basis point rate cut by December. Expectations of lower interest rates are typically bullish for non-yielding assets like gold, further pressuring the US Dollar.
Gold prices recently touched the $4,777 region, although gains remain limited amid ongoing instability in the Strait of Hormuz. US President Donald Trump announced the start of a naval blockade in the strategic waterway, warning of military action against Iranian vessels. In response, Iran threatened ports across the Persian Gulf and Gulf of Oman, keeping geopolitical risks elevated.