Spot gold (XAU/USD) extended its rebound during Asian trading hours on Monday, climbing to its highest level in about a week. This followed announcements from the United States and Iran of an agreement to end a military conflict that had lasted nearly four months. Both sides plan to restore normal shipping traffic in the Strait of Hormuz and lift the maritime blockade on Iranian ports once the agreement formally takes effect. The easing of geopolitical tensions has improved market risk sentiment and also alleviated investor concerns about a sustained surge in energy prices.
U.S. President Donald Trump stated that the agreement would ensure the long-term freedom of navigation through the Strait of Hormuz. Meanwhile, Iran indicated that the final agreement negotiations over the next 60 days still depend on whether the U.S. fulfills related commitments, including lifting the maritime blockade, ceasing military operations, and releasing frozen funds. This implies that the current ceasefire agreement still carries risks in subsequent negotiations; any complications in fulfilling these commitments could re-escalate tensions in the Middle East.
Gold is typically favored by capital during periods of heightened global political and economic uncertainty. However, as it generates no yield, its appeal can diminish in a high-interest-rate environment. With market worries about an escalation of the Middle East conflict receding, expectations for another rapid rise in U.S. inflation have cooled, thereby reducing pressure on the Federal Reserve to further tighten monetary policy.
According to the CME FedWatch Tool, the market currently prices in approximately a 64% probability of another Fed rate hike in December this year, down from around 69% the previous week. Although rate hike expectations have moderated, the possibility of U.S. interest rates remaining elevated for an extended period persists, which continues to cap the medium-to-long-term upside for gold as a non-yielding asset.
Technical Perspective: Daily Chart
From a daily chart perspective, gold remains in a corrective phase following its recent significant decline, with the overall downtrend not yet fully reversed. The price continues to trade below the 100-day moving average around $4760 and faces resistance near the middle Bollinger Band, indicating that the medium-term bearish structure still holds some advantage. The Relative Strength Index (RSI) remains around 42, below the neutral line, suggesting that upward momentum in the market is still insufficient. The short-term rebound appears more like a technical correction rather than a trend reversal.
On the upside, gold first needs to break through the resistance near the middle Bollinger Band around $4400. A sustained move above this level could open the door for a further test of the $4680 zone, with stronger resistance located near the 100-day moving average around $4760. On the downside, the $4150 area serves as the current key support. A break below this level could reopen the downside, potentially leading to a retest of previous low areas.
Technical Perspective: 4-Hour Chart
Observing the 4-hour chart, short-term rebound momentum for gold has shown some strengthening, but the moving average system has not yet formed a clear bullish alignment. The price remains in a phase of oscillatory repair. If it can break and stabilize above $4400 in the short term, bullish sentiment may improve further. However, if the rebound faces resistance and the price falls back below the key support zone, a return to a downward channel cannot be ruled out. The near-term overall trajectory will still require close monitoring of the U.S. dollar's performance, Federal Reserve policy expectations, and further developments in the Middle East situation.
The U.S.-Iran peace agreement has temporarily cooled market concerns about energy supply risks from the Middle East, impacting gold's safe-haven demand. However, as the final agreement still requires subsequent negotiation and implementation, geopolitical risks are not entirely eliminated, providing gold with some underlying support. Simultaneously, the Federal Reserve's high-interest-rate environment remains a significant factor limiting gold's ascent. Technically, gold's current move is still a corrective recovery from being oversold. A stronger rebound trend would likely only be confirmed upon a break above key moving averages and significant resistance zones. Until then, investors should remain cautious of the risk of another pullback following the rebound.
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