Gold traded close to a four-week high in Asian dealings on Thursday, extending its rebound as renewed optimism over United States–Iran peace talks and fading prospects of another Federal Reserve rate hike pressured the US dollar.
Traders moved cautiously out of traditional safe havens and back into risk-sensitive assets amid signs of diplomatic progress, while still keeping a firm eye on escalating military moves in the Gulf that could quickly reverse sentiment.
Dollar weakens on Fed outlook and diplomacy signals
Comments from President Trump that the conflict with Iran “might soon reach an end,” combined with US officials’ optimism about entering a second phase of negotiations within days, underpinned expectations for a more stable geopolitical backdrop.
Those signals, along with softer expectations for further monetary tightening, pushed the US Dollar Index to its lowest level since late February. The CME FedWatch Tool continued to show markets pricing in the likelihood of policy easing by the end of 2026, reinforcing support for non-yielding assets such as gold.
Oil steady near three-week low as inflation pressures ease
Crude oil prices hovered near a three-week low, having already retreated on improving sentiment around Middle East diplomacy. The same optimism that supported gold also limited further oil gains.
Latest US Producer Price Index data indicated moderating wholesale inflation, cooling speculation about near-term rate hikes. March’s PPI rose 4.0% year-on-year, still above the Fed’s target but below many economists’ expectations, giving policymakers room to maintain a patient stance.
Military tensions cap gold’s upside, limit dollar losses
Despite diplomatic overtures, geopolitical risk remained elevated. A full US naval blockade of Iranian ports followed last week’s Islamabad talks, hardening the backdrop against which negotiations are taking place.
Tehran’s top military commander warned that regional trade could be disrupted if the blockade is not lifted, and Iranian authorities demanded an end to Israeli operations in Lebanon as a condition for further talks.
Israeli Prime Minister Benjamin Netanyahu countered that no ceasefire pledges had been made and confirmed continued reinforcement of Israel’s northern security zone. These moves kept tensions high in the Gulf, preventing a deeper slide in the dollar and tempering further immediate gains in gold.
The current temporary ceasefire is due to expire on April 22. Mediators are working to extend it even as Iranian officials threaten to halt commerce in the Red Sea if the blockade remains in place.
Energy shock underscores fragile backdrop
The naval restrictions have already triggered a historic supply shock. The International Energy Agency reported that global oil supply fell by 10.1 million barrels per day in March. That disruption has helped keep West Texas Intermediate crude trading above $90 a barrel, despite diplomatic optimism from the White House.
Press Secretary Karoline Leavitt said the administration “feel[s] good about the prospects of a deal” with Iran, but the energy market remains tightly balanced and highly sensitive to headlines.
Technical view: gold at key decision point
From a technical standpoint, gold hovered just below the 200-period simple moving average at $4,831.22 in recent trade, a level viewed as major resistance on the current chart setup.
The moving average convergence divergence (MACD) indicator has turned positive, while the relative strength index (RSI) sits near 60, suggesting firm but not overstretched buying momentum.
A clear break above $4,831.22 would open the way toward $4,916.20, aligned with the 61.8% Fibonacci retracement of March’s decline. Sustained strength beyond that zone could bring subsequent resistance levels into view around $5,136.01 and $5,416.01.
On the downside, immediate support is seen at the 50% retracement at $4,761.81. Additional support levels are clustered near $4,607.41 and $4,416.39. A decisive move below these areas would signal renewed selling pressure and raise the risk of a full reversal of the recent recovery.
Markets poised for sharp, headline-driven swings
The market is trading at a clear inflection point, caught between improving diplomatic rhetoric and hardening military positions. Assets that are sensitive to forward-looking sentiment, including gold and crude, are primed for rapid, news-driven moves in the weeks ahead.
A breakthrough in talks, likely to be hosted in Pakistan, could trigger a fast shift into assets that benefit from lower global tensions and a weaker risk premium. Conversely, failure to extend the ceasefire beyond April 22 or any notable escalation in the Gulf could rapidly restore demand for perceived havens and reverse recent trends.
Key technical levels in precious metals and other markets are likely to act as battlegrounds where automated systems and short-term traders are highly active. A break above resistance such as the $4,831.22 level in gold could unleash cascading buy orders, amplifying price moves far beyond what fundamentals alone might imply, while downside breaks could have a similarly outsized impact.
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