Gold Analysis: Renewed Deal Hopes Balance Pressure from US Data

FUNDAMENTAL OVERVIEW

Gold came under renewed selling pressure after President Trump dampened expectations of a quick end to the Iran war, repeating that the US would only negotiate with Tehran after the November elections. Following his remarks, oil prices, Treasury yields and the US dollar began to climb, weighing on gold.

Losses extended on Wednesday after US PMI data strongly exceeded expectations, boosting Fed rate hike bets and sending real yields higher.

Markets are now focused on revived hopes for a US-Iran deal and the reopening of the Strait of Hormuz. This follows news that Iran has tabled an offer, promising to resume navigation through the strait within seven days if the US meets its demands. Iranian Foreign Minister Araghchi is staying in New York over the weekend to await a US response.

A breakthrough would be supportive for gold, as aggressive rate hike expectations would likely be scaled back, leading to a fall in real yields. Conversely, a prolonged stalemate or re-escalation would likely keep the metal under pressure from tightening financial conditions.

GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME

Gold (CFD contract) is currently trading below the key support zone around the 4,300 level. Sellers are expected to continue stepping in around these levels with a defined risk above the zone, targeting the 3,885 level. Buyers, on the other hand, would want to see the price rise back above the support zone to set up a rally toward 4,700, with 4,510 as the first target.

GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

A minor downward trendline defines the bearish structure. If the price pulls back into the trendline, sellers are likely to lean on it with a defined risk above, positioning for a break below support and new lows. Buyers, meanwhile, would need to see the price break higher to increase bullish bets toward the 4,510 level.

GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

Sellers continue to look for short opportunities around the broken support or the downward trendline, while buyers want to see upside breaks to target new highs.

UPCOMING CATALYSTS

There are no major events on the calendar today, but traders will keep a close eye on US-Iran developments after yesterday's proposal to reopen the Strait of Hormuz under certain conditions.