Key Moments
- Gold holds above a recent one-week low as a truce between Israel and Lebanon prompts profit-taking in the US Dollar.
- Stalled US-Iran talks and ongoing regional tensions sustain a geopolitical risk premium that helps limit broader USD losses.
- XAU/USD trades within a descending channel below the 4-hour 100-period SMA near $4,533, preserving a bearish short-term technical bias.
Geopolitics, Fed Outlook, and the Gold-USD Dynamic
Gold (XAU/USD) is attempting to extend an intraday rebound but remains unable to fully build on its gains, trading comfortably above the one-week low reached in the previous session. The metal is drawing support from a pullback in the US Dollar (USD), which has eased after an Israel-Lebanon truce prompted some investors to lock in profits following the greenback’s strong advance to its highest level since April 7.
Even so, several factors are preventing a deeper USD retreat and are constraining gold’s upside. Persistent uncertainty surrounding the US-Iran relationship and renewed hostilities in the broader Middle East are keeping a geopolitical risk premium in place. At the same time, expectations that elevated oil prices could fuel faster inflation and encourage interest rates to remain higher for longer are a headwind for the non-yielding metal.
Israel-Lebanon Ceasefire Eases USD, Supports Gold
Israel and Lebanon agreed to implement a ceasefire after US-led discussions in Washington on Wednesday. According to a joint statement, the truce is conditional on a complete halt in fire by Iran-backed Hezbollah and the withdrawal of the group’s operatives from southern Lebanon. This development has reduced some immediate safe-haven demand for the USD and has provided modest support to gold.
In parallel, the Republican-controlled US House of Representatives approved a resolution aiming to prevent President Donald Trump from pursuing additional military action in Iran. This move has increased optimism over a potential resolution to a three-month-old US-Israeli conflict with Iran. The combination of these political steps has helped trigger a mild USD correction after its latest surge and has, in turn, been constructive for XAU/USD.
US-Iran Talks Stall, Limiting Risk-On Sentiment
Despite the ceasefire momentum, optimism has been curbed by signs that diplomatic efforts between Washington and Tehran have encountered fresh obstacles. A report from The Jerusalem Post indicates that talks have hit a roadblock due to Tehran’s insistence on immediate unfreezing of capital at the very start of the process. Senior US officials are described as unwilling to release any funds upfront without a substantial Iranian step on the nuclear file and the Strait of Hormuz.
This divergence in positions is restraining the improvement in risk sentiment and keeping the USD underpinned. Combined with market expectations for a hawkish US Federal Reserve (Fed), these factors are likely to discourage aggressive USD selling and may limit additional gains for gold. The metal continues to trade well below the key psychological level at $4,500.
Data Calendar: Jobless Claims, Fed Speakers, and NFP in Focus
Market participants are now turning their attention to upcoming US economic releases and Fed communication for fresh direction. Weekly Jobless Claims data and remarks from influential Federal Open Market Committee (FOMC) members later in the North American session are expected to provide short-term trading cues.
Beyond that, the primary focus remains on Friday’s US monthly employment report, the Nonfarm Payrolls (NFP), which is widely watched for insight into the Fed’s policy trajectory. Concurrently, evolving geopolitical developments are likely to continue driving volatility across global asset classes, exerting a direct influence on both the USD and gold prices in the near term.
Technical Picture: XAU/USD Retains Bearish Tone
From a technical standpoint, XAU/USD continues to exhibit a bearish near-term structure, trading within a descending parallel channel and remaining below the 100-period simple moving average (SMA) on the 4-hour chart. This 100-period SMA, positioned around $4,533, currently represents a key overhead resistance zone.
Momentum indicators reinforce this cautious bias. The Relative Strength Index is hovering close to 44, while the Moving Average Convergence Divergence (MACD) is below both the zero line and its signal line. Together, these signals suggest that rallies are likely to meet selling interest and that the broader downtrend is still in place.
On the downside, the lower boundary of the channel near $4,314 is acting as the main support area. A clear break below this region would signal scope for a deeper retracement within the prevailing bearish setup.
USD Performance Against Major Currencies This Week
The table below summarizes this week’s percentage changes in the US Dollar against major currencies. The USD has shown its strongest performance versus the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.40% | 0.22% | 0.32% | 0.77% | 0.54% | 1.71% | 1.22% | |
| EUR | -0.40% | -0.18% | -0.07% | 0.39% | 0.14% | 1.34% | 0.82% | |
| GBP | -0.22% | 0.18% | 0.13% | 0.57% | 0.32% | 1.53% | 0.99% | |
| JPY | -0.32% | 0.07% | -0.13% | 0.48% | 0.27% | 1.41% | 0.89% | |
| CAD | -0.77% | -0.39% | -0.57% | -0.48% | -0.23% | 0.93% | 0.43% | |
| AUD | -0.54% | -0.14% | -0.32% | -0.27% | 0.23% | 1.20% | 0.70% | |
| NZD | -1.71% | -1.34% | -1.53% | -1.41% | -0.93% | -1.20% | -0.53% | |
| CHF | -1.22% | -0.82% | -0.99% | -0.89% | -0.43% | -0.70% | 0.53% |
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
