Gold (XAU/USD) builds on its steady intraday ascent and climbs above the $4,450 level heading into the European session on Friday to recover a part of the overnight decline. The US Dollar (USD) edges lower after US President Donald Trump announced that he will delay strikes on Iran’s energy infrastructure and extended the deadline to reopen the Strait of Hormuz until April 6. This turns out to be a key factor offering some support to the commodity. Any meaningful appreciation, however, seems elusive amid expectations of higher interest rates globally, which tends to undermine demand for the non-yielding yellow metal.
Investors now seem convinced that major central banks, including the US Federal Reserve (Fed), will adopt a hawkish stance as escalating geopolitical risks remain supportive of higher energy prices and continue to fuel inflation concerns. In fact, traders now seem to have fully priced out the possibility of any further rate cuts by the US central bank and rapidly increasing bets for a hike by the end of this year. The outlook acts as a tailwind for US Treasury bond yields and favors the USD bulls, which, in turn, should keep a lid on the Gold price and warrants some caution before positioning for further gains.
Meanwhile, contrasting news surrounding the US-Iran conflict has been weighing on investors' sentiment. Speaking at a Cabinet meeting, Trump said that Iran was "begging" to make a deal. Iranian officials, however, have denied holding talks with the US and said that there is no chance of a deal between the two adversaries. Adding to this, the deployment of additional US troops has been fueling speculation of a potential ground operation. This keeps geopolitical risks in play, which could further underpin the Greenback's global reserve currency status and should cap the upside for the Gold price.
The fundamental backdrop, along with the bearish technical setup, makes it prudent to wait for strong follow-through buying before positioning for an extension of the XAU/USD pair's goodish recovery from a four-month low, touched on Monday.
XAU/USD daily chart
Gold bears have the upper hand while below the 100-day SMA support breakpoing
The recent breakdown below the rising 100-day Simple Moving Average (SMA) and this week's failure near the said area validate the near-term negative outlook for the precious metal. Momentum remains under pressure, with the Moving Average Convergence Divergence (MACD) indicator holding in negative territory and its line below the signal line, suggesting persistent downside forces despite earlier attempts to stabilize.
Meanwhile, the Relative Strength Index (RSI) recovers from oversold conditions but holds in the low-30s, indicating weak demand and room for sellers to remain in control while rebounds stay capped below the mentioned averages. Hence, the 100-day SMA, around $4,630, might continue to act as an immediate strong barrier, where any recovery would first confront trend-context supply, followed by stronger resistance at the recent congestion area near $4,820. A daily close above that band would be needed to ease the bearish tone and expose the $5,000 region.
On the downside, immediate support aligns with the recent low around $4,380, with a break lower opening the way toward the rising 200-day SMA near $4,120 as the next key support zone. A sustained hold above $4,380 would keep the decline in a corrective mode, but failure there would reinforce the current bearish bias for XAU/USD.
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