Gold Price Rallies As Hormuz Deal Bets Batter The U.S. Dollar

Gold (XAU/USD) price edges up by over 1.30% on Monday amid thin trading due to the US Memorial Day holiday, yet sentiment remains positive as US equity futures are rising to new all-time highs, while the US Dollar dives. The XAU/USD pair trades at $4,570 after bouncing off daily lows of $4,519.

XAU/USD rises as a softer Dollar offsets thin holiday trading

Geopolitical headlines pushed the Greenback lower due to its positive correlation with Oil prices, with the US Dollar Index (DXY) down 0.32%. The DXY, which measures the performance of the American currency against six other currencies, dropped to near 99.00. The US crude Oil benchmark, WTI, is falling more than 6% to $91.00 per barrel, as US President Donald Trump said negotiations with Iran are “proceeding nicely.”

Negotiations between the US and Iran continued, and Nikkei reported that Iran would reopen the Strait of Hormuz, as Washington and Tehran reached a deal to extend a ceasefire for 60 days, pending approval from the Iranian Supreme Leader, Ayatollah Mojtaba Khamenei.

Under the deal, Iran would clear mines from the Strait of Hormuz within 30 days, restore passage for all ships, and end transit fees. Nuclear talks would resume during the 60-day ceasefire, while Washington would gradually ease sanctions on Iranian assets.

Recent headlines reduced the odds that the Federal Reserve (Fed) will raise rates in 2026, even though most board members said they’re leaning toward holding or raising rates amid inflationary pressures from the Middle East conflict.

The odds that the Fed will raise rates by December are at 50%, according to Prime Terminal data.

Source: Prime Terminal

Last Friday, Fed Governor Christopher Waller said he does not support a rate change now but wants to remove the easing bias from the statement. He added that if inflation expectations move away from target, he “would not hesitate” to back a rate hike, calling rate-cut talk “crazy.”

This week, the US economic calendar highlights housing data, Durable Goods Orders, the second estimate of Q1 2026 GDP, jobs data, and the Fed’s preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index.

XAU/USD technical outlook: Gold tests higher prices, buyers eye $4,600

Gold appears to have found a floor near $4,450, clearing $4,500 and poised to challenge $4,600. The Relative Strength Index (RSI) remains bearish but is rising, indicating that buyers are gaining momentum.

If XAU/USD clears $4,600, the next stop would be the 20-day SMA at $4,603, followed by the 50-day SMA at $4,657. On further strength, the next stop would be the $4,700 mark.

Downwards, Gold’s first support is the $4,550 milestone. Once hurdled, the next stop would be the $4,500 mark, followed by the $4,450 psychological level. Below, the next key support levels are $4,400 and the 200-day SMA at $4,357.