Gold Price Forecast: XAU/USD remains capped below $4.580 amid cautious markets
- Gold eases to the $4,530 area on Thursday but remains steady within the weekly range.
- Moderate hopes about a US-Iran deal are keeping US Dollar bulls in check.
- The precious metal is looking for direction between $4,580 and eight-week lows, at $4,455.
Gold (XAU/USD) keeps looking for direction on Thursday, showing marginal losses within the weekly range. Upside attempts remain limited below $4,580, with bears contained above the $4,455 area. Comments by US President Trump hinting at a peace deal with Iran have lifted market sentiment, keeping US Dollar bulls in check, but investors remain cautious after so much back-and-forth.
The US Dollar Index pulled back on Wednesday after Trump affirmed that the US is in the final stage of talks with Iran. The US president also said that the military option remains open, but the market reacted with only moderate relief. Trump's comments offset hawkishly leaning Federal Reserve minutes that confirmed the possibility of a rate hike is back on the table.
In the calendar on Thursday, US Preliminary S&P Global PMIs are expected to show that economic activity remained buoyant in May in the face of Iran’s war, even though the manufacturing sector might show a mild slowdown. These figures might provide additional support to the USD.
Technical Analysis: Trading range-bound with momentum indicators mixed
XAU/USD trades at $4,532, keeping a capped tone, with momentum indicators mixed. The Relative Strength Index (RSI) sits just under the neutral midline, while the Moving Average Convergence Divergence (MACD) turns positive, hinting that downside momentum is fading but not yet strong enough to shift the broader bearish bias.
On the upside, the resistance above $4,580 (May 18 highs) is holding bulls for now. Above here, the May 11 and 12 lows around the $4,650 area are likely to pose some resistance ahead of May's top in the $4,770 area. Initial support emerges at Wednesday's lows in the $4,455 area. A confirmation below that level would open the path towards the March 26 lows in the $4,350 area.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.