Gold Pulls Back as Dollar Rebounds, Downside Contained

Key Moments

Gold Backs Away From Asian Session High as Dollar Firms

Gold (XAU/USD) extended its intraday pullback from a nearly four-week high reached during Asian trading on Wednesday, sliding to a new session low around the $4,815 area in the latest dealings. The move came as the US Dollar staged a modest recovery from its weakest level since early March, limiting bullion’s ability to build on earlier gains.

The stabilization of risks around the Strait of Hormuz contributed to easing the recent selling pressure on the US Dollar, thereby weighing on the metal. At the same time, uncertainty over the prospects for a lasting US-Iran agreement continued to frame market sentiment. Iran’s ambassador to the UN described the US blockade, which took effect on Monday, as a grave violation of Tehran’s sovereignty.

Iran’s Islamic Revolutionary Guard Corps (IRGC) has vowed to retaliate, keeping geopolitical tensions elevated. This backdrop has supported demand for the US Dollar as a reserve currency, adding to the headwinds for gold prices. However, investor expectations that diplomatic channels with Iran remain open, together with declining odds of another rate increase by the Federal Reserve, have restrained the depth of the USD upswing and, in turn, helped limit the downside in the non-yielding metal.

Diplomacy Hopes Temper Fed Bets and Support Gold

US Vice President JD Vance reiterated a cautiously constructive message at a public event, stating that Washington is working toward a broader grand bargain aimed at reshaping Iran’s economic integration with the global system. In parallel, United Nations Secretary-General António Guterres told reporters on Tuesday that the resumption of US-Iran talks is highly probable.

Optimism over diplomatic efforts to prolong the US-Iran ceasefire has been a central factor behind the recent weakening of the US Dollar to its lowest level since early March and has continued to offer underlying support to gold. Expectations that such diplomacy could reduce the risk premium in energy markets have also influenced inflation dynamics and Fed policy pricing.

US PPI Data Eases Inflation Concerns and Caps Dollar Upside

Economic data released on Tuesday showed that the US Producer Price Index (PPI) increased to 4% year-on-year in March, up from 3.4% in the prior month. On a monthly basis, PPI rose 0.5%, while the measure excluding Food & Energy advanced 3.8% year-on-year in March.

All three readings came in below consensus expectations, alleviating worries about the inflationary impact of war-driven energy price gains and softening hawkish market expectations for Fed policy. The associated decline in US Treasury yields has worked to restrain the US Dollar and reinforces the case for bargain hunting in gold on price dips.

Technical Picture: Bullish Structure Intact but Momentum Near Overbought

On the 4-hour chart, the XAU/USD pair continues to trade with a broadly constructive bullish tone, attempting to consolidate momentum above the pivotal 200-period Simple Moving Average (SMA). Momentum indicators remain supportive: the Relative Strength Index (RSI) stands at 65.5, edging toward overbought territory, while the Moving Average Convergence Divergence (MACD) is rising in positive territory. Together, these signals indicate that buying pressure remains in place, but they also suggest that upside may become vulnerable to fatigue if gains extend further.

Initial resistance is located at the 61.8% Fibonacci retracement of the March downswing at $4,912.54. A sustained break above this barrier would pave the way toward the 78.6% retracement at $5,134.37, followed by the cycle high at $5,416.94.

On the downside, the 50% retracement of the March decline provides a key support zone at $4,756.73. A clear move below this level would expose deeper support at the 38.2% retracement at $4,600.92 and the 23.6% retracement at $4,408.14, where buyers would be expected to re-emerge should a more pronounced corrective phase develop.

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

US Dollar Performance Against Major Currencies

The following table summarizes the percentage change in the US Dollar against major currencies today. According to the data, the US Dollar was strongest against the Japanese Yen.