Gold Climbs to One-Month High as Hormuz Reopening Hopes Ease Inflation Concerns
Gold prices (XAU/USD) surged to a one-month high on Wednesday as renewed optimism over the reopening of the Strait of Hormuz pushed crude oil prices lower, easing inflation concerns and improving sentiment toward the precious metal. At the time of writing, XAU/USD was trading near US$4,155, up nearly 1.90% on the day.
Gold Technical Outlook Remains Constructive
From a technical perspective, gold has reclaimed its position above the 21-day Simple Moving Average (SMA) at US$4,064, signaling a constructive short-term outlook. However, the rally remains capped just below the 50-day SMA at US$4,160, suggesting that the broader trend has yet to shift decisively into bullish territory.
Momentum indicators continue to strengthen. The Relative Strength Index (RSI) has climbed to around 55, while the Moving Average Convergence Divergence (MACD) remains in positive territory, indicating that buyers are gradually regaining control despite facing near-term resistance.
On the upside, immediate resistance is located at the 50-day SMA near US$4,160, followed by the key horizontal barrier at US$4,200. A daily close above this zone could pave the way for a move toward the 100-day SMA around US$4,398.
On the downside, initial support stands at the 21-day SMA at US$4,064, followed by the major psychological level of US$4,000. A sustained break below this level would signal the start of a deeper corrective phase.
Hormuz Optimism Lifts Gold Despite Higher Rate Uncertainty
Gold extended its gains after renewed optimism emerged over a potential reopening of the Strait of Hormuz, a development expected to stabilize global energy supplies and reduce inflationary pressure.
U.S. President Donald Trump said Washington had held "very good discussions" with Iran during negotiations on Tuesday, adding that the Strait of Hormuz "will be opened very soon."
Meanwhile, Axios reported that the United States, Iran, and Oman were close to reaching a temporary agreement that could be announced as early as Wednesday. The proposed deal would establish a 60-day interim arrangement designed to restore commercial shipping through the strategically important waterway.
Analysts at ING noted that lower energy prices have eased some inflation concerns, creating a more supportive backdrop for gold. However, they emphasized that investors remain focused on the Federal Reserve's policy outlook following last week's meeting, leaving bullion caught between improving geopolitical sentiment and continued uncertainty over the path of U.S. interest rates.
Can Gold Extend Its Rally?
Despite improving market sentiment, the U.S. Dollar has weakened only modestly as traders await concrete evidence that shipping through the Strait of Hormuz will fully normalize. The U.S. Dollar Index (DXY) remained broadly flat near 99.85.
At the same time, U.S. Treasury yields have retreated from recent highs but continue to trade at elevated levels, reflecting lingering inflation concerns and reinforcing expectations that the Federal Reserve could keep interest rates higher for longer. This remains a key factor limiting further upside in gold prices.
A deeper decline in crude oil prices—potentially reducing expectations of a more hawkish Fed—may be required for gold to extend its current rally.
Looking ahead, investors will closely monitor upcoming U.S. labor market data, including the ADP Employment Change report on Wednesday and the closely watched Nonfarm Payrolls (NFP) report on Friday. These releases are expected to provide fresh clues about the Federal Reserve's next policy move and could determine the next major direction for gold prices.