• Gold gains strong traction for the second straight day amid a combination of supporting factors.
• The US-Iran ceasefire dents the USD’s reserve currency status and benefits the precious metal.
• Easing inflation concerns temper Fed rate hike bets and lend additional support to the XAU/USD pair.

Gold (XAU/USD) sticks to its strong intraday gains through the first half of the European session and currently trades above the $4,800 mark, close to a nearly three-week high set on Wednesday. The global risk sentiment gets a boost amid hopes for an end to the Middle East war, prompting aggressive US Dollar (USD) selling and assisting the precious metal in building on the overnight bounce from the $4,600 neighborhood.

The USD Index (DXY), which tracks the Greenback against a basket of currencies, tumbles to a nearly one-month low in reaction to the US-Iran ceasefire news. US President Donald Trump announced in a post on Truth Social that he will suspend planned military strikes against Iran for two weeks, provided Tehran agrees to a complete, immediate, and safe opening of the Strait of Hormuz. Iran stated that it has accepted a two-week ceasefire, with negotiations to begin on Friday in Islamabad, Pakistan. This, in turn, boosts investors' confidence and undermines the USD's global reserve currency status, benefiting the Gold price.

Meanwhile, Iran’s Foreign Minister, Seyed Abbas Araghchi, said in a statement that safe passage through the key waterway will be possible for a period of two weeks, triggering a steep decline in Crude Oil prices. This helps ease inflationary concerns and tempers bets for a rate hike by the US Federal Reserve (Fed). The outlook drags US Treasury bond yields lower and turns out to be another factor weighing on the Greenback, offering additional support to the non-yielding Gold. The lack of follow-through buying, however, warrants some caution for the XAU/USD bulls before positioning for a further appreciating move.

XAU/USD 4-hour chart

Gold could aim to test 61.8% Fibo./200-SMA on H4 confluence

From a technical perspective, the near-term bias is mildly bullish as the Gold price recovers above the mid-range of the recent consolidation. The XAU/USD pair, however, still holds below the descending 200-period Simple Moving Average (SMA) on the 4-hour chart, which coincides with the 61.8% Fibonacci retracement level of the March downfall and keeps the broader trend under pressure.

Meanwhile, the Moving Average Convergence Divergence (MACD) line has turned higher into positive territory with the histogram expanding, suggesting strengthening upside momentum after the earlier corrective phase. The Relative Strength Index (RSI) hovers in the mid-60s, reinforcing a positive tone without yet signaling extreme overbought conditions.

Nevertheless, it will still be prudent to wait for a sustained strength above the $4,920 confluence hurdle before positioning for gains to the $5,000 psychological mark and then the $5,141 level at the 78.6% retracement from the next upside objectives.

On the downside, immediate support is seen at the 50% retracement level, around the $4,760 area, below which the Gold price could drop to the 38.20% Fibo. retracement at $4,605. This is followed by a deeper cushion near $4,411 at the 23.60% level, where a break would weaken the current bullish bias and expose the lower part of the broader Fibonacci range.

(The technical analysis of this story was written with the help of an AI tool.)