Gold rebounds from a two-month low but remains on track for a third straight monthly decline.
Markets assess a proposed US-Iran agreement that would reopen the Strait of Hormuz and extend the ceasefire.
XAU/USD consolidates after its recent rebound, with momentum indicators showing mixed signals.
Gold (XAU/USD) extends its rebound on Friday as traders assess the prospects of a potential US-Iran deal. At the time of writing, XAU/USD trades around $4,530 after recovering from a two-month low of $4,366 touched on Thursday.
Risk sentiment improved after Axios reported on Thursday that the US and Iran reached a 60-day memorandum of understanding (MOU). The deal would extend the current ceasefire and reopen the Strait of Hormuz. During this period, both sides would continue talks on Iran's nuclear program.
Oil prices turned lower following the latest developments, with West Texas Intermediate (WTI) trading around $87 per barrel and heading for its first monthly decline in five months. Still, crude prices remain well above pre-war levels, keeping inflation concerns in focus.
The proposed agreement still needs final approval from US President Donald Trump. Meanwhile, Iran's Tasnim news agency reported that the deal is not finalized or confirmed.
US Treasury Secretary Scott Bessent said on Thursday that Trump has three conditions for any agreement. Iran must reopen the Strait of Hormuz, hand over its enriched uranium and fully end its nuclear program.
The lingering uncertainty is keeping dips in the US Dollar (USD) shallow. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, continues to consolidate within a two-week-old range above the 99.00 mark.
As a result, Gold’s upside remains limited, while hawkish signals from the Federal Reserve (Fed) linked to elevated Oil prices act as an additional headwind. The precious metal is on course for a third monthly drop.
The latest US Personal Consumption Expenditure (PCE) inflation data also reinforced expectations that the Fed could keep interest rates higher for longer as inflation pushes further away from the central bank’s 2% target.
Kansas City Fed President Jeff Schmid said on Friday that policymakers “may need to weigh how to make monetary policy more restrictive” and stressed that the Fed “must signal commitment to lowering inflation.”
Looking ahead, the US economic calendar remains relatively light on Friday, leaving Gold at the mercy of Fed commentary and headlines surrounding US-Iran talks.
Technical Analysis: XAU/USD consolidates after rebound from two-month low
XAU/USD sits between the Bollinger Bands midline at roughly $4,585 and the lower band near $4,410, leaving the near-term tone broadly neutral as Gold consolidates after its recent rebound.
The Bollinger Bands 20-day Simple Moving Average (SMA) suggests the primary volatility mean now acts as overhead resistance, while the lower band underpins the downside. Momentum is mildly soft, with the Relative Strength Index (RSI) at 45, and the Moving Average Convergence Divergence (MACD) still negative but improving, hinting at a market caught in mean-reversion rather than a directional trend.
On the topside, initial resistance is located at the Bollinger midline around $4,585, and a sustained break above this area would open the way toward the upper band near $4,761.
On the downside, the lower Bollinger Band at approximately $4,410 marks the first key support, and a daily close below this floor would expose the recent volatility lows and risk a deeper corrective extension.
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