Gold Gains as US-Iran Peace Deal Eases Rate Hike Fears

Key Moments

Gold Edges Higher on US-Iran Peace Agreement

Gold prices gained traction in early European hours on Monday, with XAU/USD pushing to a weekly high as buyers stepped in. The move followed announcements from United States and Iranian officials that they had agreed on a framework to end their conflict, which has helped ease concerns around inflation and the prospect of more aggressive interest rate increases.

Washington and Tehran said on Sunday that they reached an agreement scheduled to come into force on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.

Trump added that the agreement he reached with Iran would ultimately assure that the Strait of Hormuz is “permanently toll free,” per the New York Times. The United Kingdom (UK), France, Germany and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war. Hopes of a peace framework for a deal to end the US-Iran war provide some support to the yellow metal.

Diplomatic Terms and Market Implications

Iran’s deputy foreign minister, Kazem Gharibabadi, said on Sunday that the 60-day negotiations between the US and Iran will hinge on the US meeting three commitments. Those commitments include “lifting and ending the naval blockade,” “ending the state of war and military operations,” and “releasing Iran’s frozen funds.”

Any signs of renewed tensions in the Middle East could lead to a rise in crude oil prices, stoking inflation concerns and raising expectations of interest rates staying higher for longer. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.

Markets have priced in nearly a 64% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 69% last week, according to the CME FedWatch tool.

Technical Picture: Gold Still Below Key Moving Average

Despite the latest bounce, the broader technical backdrop for Gold remains cautious. On the daily chart, XAU/USD is still trading in a corrective pattern, firmly beneath the 100-day simple moving average (SMA) and below the middle line of the Bollinger Bands. This positioning indicates that upward moves continue to face headwinds within a generally negative structure.

The Relative Strength Index (RSI) is hovering near 42, remaining under the neutral 50 mark. This suggests that bullish momentum is muted and supports the view that rallies are likely to encounter selling interest as long as prices remain under these resistance areas.

On the topside, initial resistance emerges at the Bollinger middle band near $4,415, followed by the upper Bollinger band around $4,685, with the 100-day SMA higher up near $4,762 acting as a more strategic barrier if a stronger rebound unfolds.

On the downside, the first notable support is seen at the lower Bollinger band around $4,142, where a break would open the door to a deeper retracement toward prior lows, keeping the near-term bias tilted to the downside while price trades beneath the clustered daily resistance band.