Gold (XAU/USD) is trading with a negative bias on Tuesday as hopes for US-Iran peace talks fade after renewed tensions in the Strait of Hormuz over the weekend weigh on sentiment. At the time of writing, XAU/USD is trading around $4,700, down about 2.50% on the day, under pressure from a slight bounce in the US dollar (USD).
At the same time, strong US data released at the beginning of the day increased the pressure on gold. Retail sales rose 1.7% MoM in March, beating expectations of 1.4% and accelerating from February’s 0.7% growth. Furthermore, the ADP employment change 4-week average increased from 39K to 54.8K.
US-Iran talks in doubt as ceasefire deadline approaches
Diplomatic efforts to end the US-Iran war remain uncertain, with mixed signals in Pakistan over a possible second round of peace talks. Several media reports suggested Iran was sending a delegation to the talks. However, Iran’s state broadcaster rejected these claims, saying in a Telegram post that “So far, no delegation from Iran has traveled to Islamabad, neither primary nor secondary, neither preliminary nor follow-up.”
Meanwhile, a White House official said that US Vice President JD Vance has not yet left for talks. With the current two-week ceasefire set to expire on Wednesday, markets remain cautious. US President Donald Trump said on Monday it was “highly unlikely” that he would extend the ceasefire, adding, “We will not open the Strait of Hormuz until the deal is signed.” Trump has also warned that if no agreement is reached, fighting could resume.
On the Iranian side, Mohammad Bagher Ghalibaf said that Tehran is “preparing to show new cards on the battlefield” and “will not accept negotiations under the shadow of threats.”
Gold remains under pressure due to high oil prices
Meanwhile, the ongoing disruption in the Strait of Hormuz, which remains under a dual blockade by US naval forces and Iran, continues to support higher oil prices. This is focusing attention on inflation risks and boosting expectations that major central banks, including the Federal Reserve (Fed), can keep interest rates high for longer.
While gold is often seen as a hedge against inflation, higher borrowing costs impact its appeal by increasing the opportunity cost of holding the non-yielding metal. As a result, the precious metal remains under pressure in the near term, even as geopolitical risks provide some support and keep prices largely capped.
Fed chair candidate Kevin Wersh said during his Senate testimony that the Fed needs a new inflation framework and broader “regime change” in its conduct of monetary policy.
Looking ahead, traders will be closely watching the US-Iran talks and the ceasefire deadline, as well as the US dollar and oil price movements for fresh directional signals.
Technical Analysis: XAU/USD stuck in range as momentum weakens
In the four-hour chart, The pair is slipping along the bottom of the Bollinger Envelope, while the 14-period Relative Strength Index has retraced to around 35, indicating emerging oversold conditions but not yet signaling a decisive bullish reversal, and the Average Directional Index near 14 suggests the downtrend remains weak rather than impulsive.
At the top, initial resistance lies at the lower Bollinger Band around $4,725, followed by the middle band near $4,796 and then the upper band near $4,867, where any recovery is likely to face renewed selling pressure. With no meaningful four-hour support levels from the Bollinger framework beneath the market, sustained trading under the $4,725 area will leave XAU/USD vulnerable to further upside unless the oversold momentum on the RSI triggers a corrective bounce towards the mid-band area.
(The technical analysis for this story was written with the help of AI tools.)
Sona FAQ
Gold has played an important role in human history as it has been widely used as a store of value and medium of exchange. Currently, apart from its luster and use for jewellery, the precious metal is widely viewed as a safe-haven asset, meaning it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and falling currencies because it is not dependent on any specific issuer or government.
Central banks are the largest holders of gold. In their aim to support their currencies in turbulent times, central banks diversify their reserves and purchase gold to improve the perceived strength of the economy and currency. High gold reserves can be a source of confidence for a country’s solvency. Central banks added 1,136 tonnes of gold, worth about $70 billion, to their reserves in 2022, according to World Gold Council data. This is the highest annual purchase since records began. Central banks of emerging economies like China, India and Türkiye are rapidly increasing their gold reserves.
Gold has an inverse relationship with the US dollar and US Treasuries, which are both major reserve and safe-haven assets. When the dollar depreciates, gold rises, helping investors and central banks diversify their assets in turbulent times. Gold is also inversely correlated with risky assets. Stock market rallies weaken the price of gold, while selling in riskier markets benefits the precious metal.
The price may increase due to a variety of factors. Gold’s safe-haven status could cause its price to rise sharply due to geopolitical instability or fears of a deep recession. As a yield-low asset, gold tends to rise with low interest rates, while higher costs of money generally weigh on the yellow metal. Still, most of the moves depend on how the US dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong dollar keeps the price of gold in check, while a weak dollar is likely to push gold prices higher.
