Key Moments
- Gold (XAU/USD) hit a new intraday high. It rebounded from a one-week low near $4,669-$4,668.
- The US Dollar eased after a temporary US-Iran ceasefire extension. However, tensions around the Strait of Hormuz limited losses.
- Traders stayed cautious. Expectations for a less dovish Fed and mixed signals kept bulls in check.
Gold Benefits from Softer Dollar, But Iran Tensions Linger
Gold (XAU/USD) rose to a fresh daily high on Wednesday. It extended its recovery from Tuesday’s one-week low. The move followed weakness in the US Dollar.
The Dollar slipped after news of a temporary US-Iran ceasefire extension. As a result, Gold found support. However, traders remained cautious due to ongoing geopolitical risks.
Meanwhile, concerns about supply disruptions in the Strait of Hormuz persisted. In addition, expectations of a less dovish Federal Reserve limited further Dollar weakness. Therefore, Gold’s upside stayed capped.
Geopolitics: Ceasefire Extension and Blockade Tensions
On Tuesday, US President Donald Trump extended the ceasefire with Iran indefinitely. He said the move would allow more time for peace talks.
However, Iran pushed back on that claim. Tasnim News Agency reported that Iran did not request an extension. As a result, uncertainty remains high.
At the same time, tensions continue over a US naval blockade of Iranian ports. Trump plans to keep the pressure on Tehran. In contrast, Iran demands the removal of the blockade before talks resume.
Therefore, geopolitical risks remain elevated. This backdrop supports the US Dollar, even as short-term sentiment weakens it.
Fed Expectations and Economic Data Support the Dollar
Fed Chair nominee Kevin Warsh spoke at a Senate hearing on Tuesday. He struck a slightly hawkish tone. He also stressed independence from the White House.
Warsh confirmed he made no promises on rate cuts. As a result, markets adjusted their expectations.
Meanwhile, strong US Retail Sales data signaled economic resilience. Consequently, some economists raised growth forecasts.
Together, these factors support the US Dollar. Therefore, traders remain cautious about betting on further Gold gains.
Data Calendar and Market Drivers for XAU/USD
On Wednesday, the US calendar lacks major data releases. As a result, geopolitical headlines may drive markets.
Any update on US-Iran relations could increase volatility. Therefore, Gold may see short-term trading opportunities.
However, analysts note that stronger buying is needed. Only then can Gold confirm a sustained uptrend.
Technical Picture: Key Levels and Indicators
Last week, Gold failed to break above $4,900. It then pulled back. As a result, bulls remain cautious.
The RSI sits near 46, which signals weak momentum. Meanwhile, the MACD stays in negative territory. Therefore, any upward move may be slow.
In addition, price tests a key resistance zone. This zone includes the 100-period EMA and the 61.8% Fibonacci retracement. As a result, the short-term bias remains slightly bearish.
| Technical Level | Type | Price | Implication |
|---|---|---|---|
| $4,754.02 | 50.0% Fibonacci retracement | Support | A break below may trigger further downside. |
| $4,595.95 | 38.2% Fibonacci retracement | Support | Next support if selling pressure increases. |
| $4,760-$4,765 | Confluence zone | Resistance | A key area that may define near-term direction. |
| $4,912.08 | 61.8% Fibonacci retracement | Resistance | Strong barrier where sellers may return. |
On the downside, support appears at $4,754.02. A break below this level could expose $4,595.95. In that case, the correction may deepen.
On the upside, a move above $4,760-$4,765 could lift prices higher. Then, the next target sits near $4,912.08. However, sellers may defend that zone.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar: Structure, Policy and Balance Sheet Tools
US Dollar Overview
The US Dollar is the official currency of the United States. It is also the world’s main reserve currency. In fact, it accounts for over 88% of global FX turnover.
After World War II, the Dollar replaced the British Pound. Initially, it was backed by gold. However, the system changed in 1971 after Bretton Woods ended.
Federal Reserve Policy and the Dollar
The Federal Reserve drives the Dollar through monetary policy. It aims for stable prices and full employment.
When inflation rises above 2%, the Fed raises rates. This supports the Dollar. In contrast, when inflation is low, the Fed cuts rates. This weakens the currency.
Quantitative Easing (QE)
During crises, the Fed may use quantitative easing. This policy adds liquidity to markets.
The Fed buys government bonds and increases money supply. As a result, the Dollar often weakens. For example, QE played a key role during the 2008 crisis.
Quantitative Tightening (QT)
In contrast, quantitative tightening reduces liquidity. The Fed stops bond purchases and lets assets mature.
As a result, QT usually supports the US Dollar.
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