Gold holds steady near $4,700 as the US Dollar eases after reports that Tehran has offered a plan to reopen the Strait of Hormuz.
The metal struggles for direction despite a softer US Dollar as interest rate expectations dominate ahead of central bank meetings.
Technically, XAU/USD remains capped below key moving averages, keeping the near-term bias neutral to slightly bearish.
Gold (XAU/USD) holds firm at the start of the week as fresh US-Iran headlines improve market sentiment, even after talks over the weekend failed to materialize. At the time of writing, XAU/USD is trading around $4,704, little changed on the day after hitting an intraday peak of $4,730.
A report by Axios, citing a US official and two sources familiar with the matter, said Iran has presented a new proposal to the United States to reopen the Strait of Hormuz and end the war, while leaving nuclear negotiations for a later stage.
The development follows US President Donald Trump canceling a planned visit to Islamabad by envoys Jared Kushner and Steve Witkoff, saying that the Iranians had “offered a lot, but not enough.”
The US Dollar (USD) came under pressure following the Axios report, while Washington has yet to respond. Markets remain hopeful that talks could resume as Tehran steps up diplomatic efforts to end the war.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 98.27, down about 0.26% on the day.
However, Gold is struggling to capitalize on the weaker US Dollar as interest rate expectations continue to dominate price action, with attention now turning to major central bank policy meetings later this week, including the Federal Reserve (Fed), the European Central Bank (ECB), the Bank of England (BoE), and the Bank of Japan (BoJ).
All are widely expected to keep rates unchanged as the recent surge in Oil prices has revived inflation concerns and heightened risks to economic growth. Recent economic data also point to a pickup in inflation across major economies since the onset of the war, largely driven by higher gasoline prices.
Against this backdrop, markets expect central banks to keep borrowing costs higher for longer, which is acting as a key headwind for the non-yielding metal despite its traditional role as an inflation hedge and safe-haven asset.
Traders are now awaiting clearer signals on the rate path from policymakers, particularly from the Fed, as the war poses risks to both sides of its dual mandate — inflation and employment. Any hawkish signal could further weigh on Gold, as higher interest rates increase the opportunity cost of holding the non-yielding asset.
Looking ahead, traders will closely monitor developments in the US-Iran war, particularly any progress toward reopening the Strait of Hormuz. A decision to restore shipping through the key waterway could push Oil prices lower and help ease inflation concerns. Until then, Gold’s upside may remain limited.
However, the downside is likely to stay contained as traders avoid aggressive selling amid persistent geopolitical uncertainty, while the broader uptrend remains intact despite some loss of momentum in technical indicators.
Technical analysis: XAU/USD struggles below key SMAs
In the daily chart, XAU/USD is maintaining a capped tone as spot holds above the 200-day Simple Moving Average (SMA) at $4,257 but remains below the 100-day and the 50-day SMA.
This configuration suggests that while the broader uptrend is still underpinned by long-term support, the near-term rebound is constrained by overhead moving-average resistance, with the Relative Strength Index (RSI) around 46 and a low Average Directional Index (ADX) near 20 hinting at weak, directionless momentum.
On the top side, initial resistance is located at the 100-day SMA near $4,746, with a sustained break exposing the 50-day SMA around $4,863. On the downside, the $4,650-$4,600 area serves as the initial support zone, followed by the 200-day SMA near $4,257, where a clear violation would likely strengthen the bearish bias and open the door to a deeper correction.
(The technical analysis of this story was written with the help of an AI tool.)
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