Gold stays capped below $4,800 as lingering Strait of Hormuz risks and a firmer US dollar offset optimism over Iran diplomacy.

Gold stays under pressure but lacks strong follow-through selling amid mixed signals. The US dollar finds support from ongoing Hormuz-related risks, acting as a headwind for the metal. However, optimism over Iran diplomacy and easing expectations for Fed rate hikes help cap the dollar, providing some support to bullion.

Gold (XAU/USD) trims its earlier losses from the Asian session, rebounding from the $4,768–$4,767 area—a three-day low—but struggles to build momentum and stays below the $4,800 level amid mixed signals. While diplomatic efforts to resolve the Middle East conflict are intensifying, lingering tensions between the US and Iran, particularly due to the ongoing US naval blockade of Iranian ports, continue to support the US Dollar’s safe-haven appeal and weigh on the metal.

At the same time, a 10-day ceasefire between Israel and Lebanon has raised hopes for a broader US-Iran agreement. US President Donald Trump struck an upbeat tone, suggesting Iran is close to a deal, and reports indicate both sides have agreed in principle to resume talks, though details remain undecided. These developments support a more positive market mood, which, alongside reduced expectations of further Federal Reserve rate hikes, limits the USD’s rebound from recent lows and helps cushion Gold’s downside.

Earlier in the week, US Producer Price Index (PPI) data eased concerns about inflation stemming from rising energy costs linked to the conflict. Additionally, expectations of easing geopolitical tensions have kept Crude Oil prices subdued, softening hawkish Fed expectations. Markets are now pricing in about a 30% chance of a Fed rate cut by year-end, restraining USD strength and providing support for non-yielding assets like Gold. As such, traders may prefer to wait for stronger selling pressure before anticipating a deeper pullback from the recent one-month high.

Looking ahead, the absence of key US economic data on Friday leaves the USD influenced by speeches from FOMC members. However, attention will remain focused on potential US-Iran talks over the weekend, with headlines likely to drive volatility and create trading opportunities in Gold. Despite recent fluctuations, XAU/USD is still on track for modest gains for a third consecutive week.

Gold H4 chart

From a technical standpoint, the failure to break above the 200-period SMA on the 4-hour chart overnight signals a note of caution for bullish traders. Although prices pulled back afterward, the decline found support ahead of the 50% retracement of the March drop, suggesting that traders may prefer to wait for a decisive move below the $4,765 support area before anticipating deeper losses.

Momentum indicators offer a mixed picture. The RSI is hovering around the neutral 50 level, while the MACD remains below the zero line in negative territory, indicating that sellers still hold a near-term edge. For sentiment to improve, price would need to reclaim the 200-period SMA near $4,814, followed by a stronger resistance at the 61.8% Fibonacci retracement around $4,912. A sustained breakout above these levels could shift the outlook more positively and pave the way toward $5,130 and $5,409.

On the downside, immediate support lies near the 50% retracement at $4,759. A break below this level could lead to further declines toward $4,606 and then $4,416, where buyers may step in more aggressively to defend the broader uptrend.