Gold’s (XAU/USD) is practically flat at $4,790 on Monday, as investors return to the safety of the US Dollar (USD) amid threats to the US-Iran peace process. Looking at a wider perspective, the precious metal keeps trading back and forth within the upper range of the last two weeks’ horizontal channel, with key resistance at $4,850.
A spokesperson from the Iranian foreign ministry has threatened to skip the peace process after the US seized an Iranian cargo on Sunday, an action that was considered by Tehran an “aggressive act” and a violation of the ceasefire.
Investors, however, have not completely ruled out the possibility of both countries returning to the negotiating table on Tuesday, which is keeping the US Dollar from rallying further.
Technical Analysis
XAU/USD trades at $4,790 with a neutral-to-slightly bearish bias as it sits just beneath the top of the last two weeks’ horizontal channel, at $4,850. Technical indicators in the 4-hour chart are showing a lack of clear bias.
The Moving Average Convergence Divergence (MACD) holds in negative territory, while the Relative Strength Index (RSI) hovers close to the 50 line, hinting at fading upside momentum rather than outright selling pressure.
Session lows at the $4,730 area are holding bears for now, keeping the channel bottom at the $4,600 area at a safe distance. On the upside, bulls should breach the mentioned $4,850 area (April 8, 14, and 15 highs), which would expose a previous support-turned-resistance right above $5,000.
(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.
Source: https://www.fxstreet.com/news/gold-price-forecast-xau-usd-remains-trapped-in-a-range-below-4-850-202604201210
