Gold (XAU/USD) builds on the previous day’s momentum, extending its rally for a second consecutive session to reach a near two-week high around $4,141 during Wednesday’s Asian trading.
Fundamental Analysis
Optimism over a diplomatic breakthrough in the five-month US-Iran conflict continues to support market sentiment, despite lingering uncertainty. US Treasury Secretary Scott Bessent said Washington could finalize an agreement with Tehran as early as Wednesday to reopen the Strait of Hormuz and ease tensions. Separately, Axios reported, citing sources, that the US, Iran, and Oman are close to reaching an interim deal to restore access to the key shipping route. Meanwhile, OPEC+’s decision to raise oil production starting in September has eased supply concerns, sending crude prices to their lowest level since June 13. Softer oil prices have reduced inflation fears and weakened expectations for aggressive Federal Reserve tightening, weighing on the US Dollar while boosting demand for non-yielding Gold.
Even so, markets continue to expect the Fed could still raise interest rates before year-end as the US labor market shows signs of resilience. Tuesday’s JOLTS report revealed job openings slipped slightly to 7.36 million but remained above year-ago levels, indicating underlying labor market strength. Additionally, Kansas City Fed President Jeff Schmid and Philadelphia Fed President Anna Paulson reiterated support for keeping monetary policy restrictive to contain inflation. Their comments may limit further downside in the US Dollar ahead of Friday’s closely watched Nonfarm Payrolls (NFP) report.
Before then, investors will focus on Wednesday’s US economic releases, including the ADP private employment report and the ISM Services PMI, for fresh clues on the economy and the Fed’s policy path. At the same time, any new developments surrounding the Middle East conflict could influence both the US Dollar and Gold. Overall, the current fundamental backdrop continues to favor Gold, leaving XAU/USD well-positioned for additional near-term gains.
Technical Analysis
From a technical standpoint, Gold’s decisive move above the 200-period Exponential Moving Average (EMA) on the four-hour chart reinforces the bullish outlook. Momentum indicators continue to favor buyers, with the Relative Strength Index (RSI) holding near 65, reflecting solid upside momentum, while the Moving Average Convergence Divergence (MACD) histogram remains in positive territory, suggesting bullish control remains intact in the near term.
That said, the rally may begin to encounter resistance above the $4,130 region, as increasingly stretched momentum indicators could limit further upside if buying pressure starts to ease. On the downside, initial support is located around the 200-period EMA near $4,115. A sustained break below this level could trigger a deeper pullback toward the daily low around $4,065, followed by the $4,043–$4,042 support zone, the $4,020 level, and ultimately the key psychological threshold at $4,000.
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