Gold is replicating the recovery moves seen in Wednesday’s Asian trading early Thursday, as buyers continue to flirt with the $5,200 level. Sustained US Dollar (USD) weakness and looming US-Iran talks aid the bright metal’s rebound.
Gold: All eyes on US-Iran talks and tariff headlines
The Greenback keeps pushing lower against its major currency rivals as a solid earnings report from the leading global chipmaker, Nvidia Corp, boosts market optimism, diminishing its safe-haven appeal.
Additionally, lingering uncertainty over the US trade policy and a fresh USD/JPY sell-off exert bearish pressure on the USD, allowing Gold to recover some ground.
US Trade Representative Jamieson Greer said on Wednesday, the US tariff rate for some countries will rise to 15% or higher from the newly imposed 10%, without revealing any further details.
Meanwhile, the Japanese Yen remains on the rise after Bank of Japan (BoJ) Governor Kazuo Ueda said to flag March and April as possible live meetings. BoJ Board Member Hajime Takata also noted that the “central bank must conduct further rate hikes in a gradual manner. “
Gold also takes advantage of heightened geopolitical risks between the United States (US) and Iran as both sides meet later this Thursday in Geneva for the third round of talks.
Heading into the meeting, US Secretary of State Marco Rubio said early Thursday that Iranian insistence on not discussing ballistic missiles is a big problem.
Besides, persistent dovish bets surrounding the US Federal Reserve (Fed) interest rate cuts, despite the recent hawkish speeches from the policymakers, continue to act as a tailwind to the non-yielding assets such as Gold.
Looking ahead, traders eagerly await the geopolitical developments, while the mid-tier US Jobless Claims data and Fedspeak could keep them entertained.
If the US-Iran talks once again end without any deal on the nuclear programme, touting only progress, it will be perceived negatively by the markets. A disappointing outcome could imply an imminent attack by the US on Iran, stoking safe-haven demand for Gold.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $5,187.14. The near-term bias is mildly bullish as price holds above the 21-day Simple Moving Average (SMA) near $5,020 and the 50-day SMA around $4,775, while remaining well supported by the rising 100- and 200-day SMAs further below. The Relative Strength Index (RSI) at 59 keeps momentum in positive territory without overbought stress, suggesting buyers retain control after digesting April’s overextended readings. Price also trades above the 61.8% Fibonacci retracement at $5,141, measured from the $4,401 to $5,598 rally, indicating the latest pullback has been contained within a standard corrective zone.
Initial support aligns at the 61.8% retracement at $5,141, followed by the 50% retracement and 21-day SMA cluster around $5,000, where a break would expose the 38.2% level near $4,859 as the next downside pivot. On the topside, immediate resistance emerges at the recent local high just under $5,240, with a daily close above this area opening the path toward $5,342, which corresponds to the 78.6% retracement of the same advance. A sustained push through $5,342 would reassert the broader uptrend and bring the $5,598 peak back into focus.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.