Gold prices rose for a second consecutive session on Tuesday, edging toward $4,800 an ounce as signs of potential diplomatic progress between the United States and Iran weakened demand for the safe-haven U.S. dollar.
The metal climbed after bouncing from Monday’s one-week low of $4,664, with the softer dollar making dollar-denominated bullion more attractive to overseas buyers.
Us-iran talks weigh on dollar
Reuters reported that U.S. and Iranian representatives may resume talks in Pakistan this week. U.S. President Trump said on Monday that Tehran had shown a willingness to “work for a deal,” while Vice President Vance indicated that any further steps would depend on Iran’s response.
The prospect of renewed dialogue eased geopolitical tensions and pushed the U.S. Dollar Index (DXY) down about 0.4% in overnight trading. The pullback challenged the greenback’s recent strength and opened the door for alternative stores of wealth, including gold.
Key levels: range intact, breakout levels in focus
On the charts, XAU/USD remains locked in a horizontal range:
- resistance: around $4,850, matching the April 8 high
- support: near $4,620, in line with the 38.6% Fibonacci retracement of the March decline
Momentum signals remain subdued. On the four-hour timeframe, the Relative Strength Index sits above 50 but below 60, indicating modest positive bias without strong conviction. The MACD hovers near the zero line, pointing to neutral momentum.
Analysts see two key inflection points:
- a decisive break above $4,850 could open the way to the 61.8% Fibonacci level at $4,932 and then toward former support just above $5,000
- a drop below $4,620 would undermine the current bullish structure and expose the March 26 low near $4,350
Traders are watching for a close above $4,850 on strong volume to confirm any bullish breakout, while failure at that ceiling followed by a move under $4,620 would signal an extended period of range-bound trading or deeper correction.
Macro backdrop: inflation and fed policy support demand
Gold’s appeal remains underpinned by persistent inflation pressures and uncertainty over U.S. monetary policy.
The latest Consumer Price Index data from the Bureau of Labor Statistics for March 2026 showed annual inflation at 3.1%, still above the Federal Reserve’s 2% target despite easing from earlier peaks. Market participants view this as evidence that protecting capital from currency debasement remains a priority.
Minutes from the Federal Open Market Committee’s March meeting suggested policymakers may delay any rate cuts until the third quarter. Expectations of “higher for longer” interest rates add uncertainty to the growth outlook and can divert capital away from riskier assets and toward long-standing stores of value such as gold, which does not yield interest but is not directly tied to any government or currency issuer.
Central bank buying provides a firm base
Official sector demand continues to provide a structural floor for the market.
The World Gold Council reported that central banks added 1,136 tonnes of gold in 2022, worth roughly $70 billion, the largest annual increase on record. Full-year 2025 data showed further net purchases of 984 tonnes, underscoring a sustained push to diversify reserves away from fiat currencies.
This ongoing accumulation offers a stable source of demand and helps cushion the market against short-term speculative swings.
Market dynamics: dollar, yields and equities
Gold typically moves inversely to both the U.S. dollar and U.S. Treasury yields:
- a weaker dollar tends to lift gold by lowering its cost in other currencies
- falling yields reduce the opportunity cost of holding a non-yielding asset
Recent volatility in equity markets has added to support. The S&P 500 has fallen about 2.3% over the past five sessions, spurring a shift into assets less correlated with corporate earnings and stock performance. For traders exposed to sharp equity swings, gold’s historically defensive profile offers a diversification tool.
What traders are watching next
Market attention is now centered on:
- $4,850 resistance: a clear break and close above this level could validate a continuation of the uptrend toward $4,932 and above $5,000
- $4,620 support: a sustained move below here would suggest the bullish phase is fading and put the March 26 low near $4,350 back in play
Until one of these levels gives way, gold is likely to remain in its established range, with geopolitical headlines, inflation data, and Fed communication serving as key short-term catalysts.
Curious about diversifying beyond gold? Learn how to invest in gold strategically alongside crypto.
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