Gold Recovers After Ceasefire Reports, Dollar Pressure Persists

Key Takeaways

• Gold rebounded modestly after reports of a US-Iran ceasefire extension eased oil-driven market fears.
• Bullion remains under pressure due to persistent US inflation and the Fed’s hawkish stance.
• XAU/USD rose to 4,514, above the 5-day moving average but below the 10- and 20-day averages.
• Market reaction depends on confirmation of the ceasefire, oil price stability, and potential easing of Fed rate risk.
• Gold continues on track for monthly and quarterly losses despite the corrective bounce.

Gold recovered modestly on Friday after hitting a two-month low earlier in the week. XAU/USD traded at 4,514.49, rising 18.33 points, or 0.41%, reaching a session high of 4,522.38.

Spot gold reached $4,514.19 per ounce by 06:10 GMT, rebounding from Thursday’s low of $4,365.76. US gold futures for August delivery inched 0.3% higher to $4,544.80. Despite the rebound, bullion remains on track to lose approximately 2.4% for the month and 15% over the past three months.

Ceasefire Deal Becomes Main Catalyst

The rebound was triggered by reports that the US and Iran agreed to extend the ceasefire and lift shipping restrictions through the Strait of Hormuz. The deal still requires President Donald Trump’s approval, while Iranian sources have indicated it has not yet been finalised.

Traders are closely monitoring the confirmation, as a signed agreement could reduce oil-driven inflation fears and dampen safe-haven demand, whereas a failure could lift the dollar and pressure gold further.

Fed Outlook Limits Gold Upside

Persistent US inflation keeps the Federal Reserve on the radar for traders. April’s PCE price index rose 3.8% year-on-year, with core PCE at 3.3%, while energy prices rose 5.5% month-on-month. Personal spending grew 0.5%, but personal income remained flat and the savings rate dropped to 2.6%, the lowest since June 2022.

These figures suggest that higher rates could persist well into next year, making cash and bonds more attractive than non-yielding bullion. Gold’s current rebound depends on additional catalysts, including a softer dollar, falling oil, and easing Fed rate expectations.

Technical Analysis

Gold staged a corrective bounce from the 4,390 area to above 4,500. XAU/USD traded at 4,514, above the 5-day moving average of 4,509 but still below the 10-day and 20-day moving averages at 4,519 and 4,584 respectively.

Discover how traders can navigate gold’s short-term rebounds, technical levels, and geopolitical catalysts in this article.