Gold Holds Positive Bias Above $4,700 as Weaker US Dollar Supports Bullion Near Multi-Week High
Gold prices maintained a positive tone for the third consecutive trading session, holding firmly above the $4,700 level and staying close to a one-and-a-half-week high reached in the previous session. However, bullish momentum appears cautious as traders await greater clarity surrounding a potential US-Iran peace agreement before placing fresh positions. The downside for the precious metal remains limited due to fading expectations of a hawkish Federal Reserve and broad weakness in the US Dollar, both of which continue to support bullion prices.
Wednesday’s breakout above the 200-hour Exponential Moving Average (EMA), followed by sustained strength beyond the 38.2% Fibonacci retracement level from the April swing high decline, has been viewed as a key bullish trigger for XAU/USD buyers. Gold also remains above the critical 50% retracement level, reinforcing the constructive near-term outlook.
Meanwhile, the Relative Strength Index (RSI) remains around 65, maintaining a bullish tone without yet entering overbought territory. This suggests there is still room for additional upside momentum, although the metal could face corrective pullbacks if buyers begin losing traction. At the same time, the Moving Average Convergence Divergence (MACD) indicator remains below the zero line with negative readings, signaling that bullish momentum is not yet fully convincing.
On the upside, immediate resistance is seen near the 61.8% Fibonacci retracement level at $4,741.58, followed by stronger resistance around the 78.6% retracement level near $4,807.61. A break above these levels could open the door toward the recent cycle high around $4,891.72, which continues to cap the broader bullish scenario.
On the downside, initial support is located near the 50% retracement level at $4,695.20, followed by a more substantial demand zone around the 38.2% retracement at $4,648.82 and the 200 EMA near $4.634,46. A sustained move below this area could expose the 23.6% retracement level at $4,591.44 and potentially the recent swing low around $4,498.68 if selling pressure intensifies.
Fundamental Overview
US President Donald Trump struck an optimistic tone on Wednesday, stating that negotiations had made progress over the past 24 hours and suggesting that a deal with Iran was highly possible. In addition, Axios reported that the United States and Iran were very close to finalizing an agreement. However, Iranian state-linked media rejected claims of a broader deal, citing reports from the Iranian Students News Agency indicating that the US proposal included terms previously rejected by Tehran in recent days.
Further reports from the BBC indicated that Iran is reviewing a one-page memorandum with the United States that could gradually reopen the Strait of Hormuz and lift American restrictions on Iranian ports. Nevertheless, Trump warned that Iran could face bombing “at levels and intensity far greater than before” if a peace agreement is not reached. Investors are therefore reassessing the likelihood of a finalized deal amid persistent disagreements over Iran’s nuclear program, a factor that continues to weigh on gold prices.
On the economic front, the latest US ADP Employment Report released Wednesday showed private-sector payrolls increased by 109K in April, compared with a downwardly revised 61K in the previous month. The stronger-than-expected reading highlighted continued resilience, though unevenness, within the US labor market. Meanwhile, the CME FedWatch Tool from CME Group indicates traders are still pricing in the possibility of another Federal Reserve rate hike later this year. This has helped limit further losses in the US Dollar and capped stronger gains in non-yielding gold.
Traders are now focusing on the weekly US Initial Jobless Claims data, alongside speeches from influential FOMC members, which may generate fresh volatility during the North American trading session. However, market attention remains firmly centered on Friday’s closely watched US Nonfarm Payrolls (NFP) report. In addition, ongoing developments surrounding the Middle East crisis are expected to continue driving volatility across global financial markets and shaping the next directional move for gold prices.