Gold (XAU/USD) extended its gains on Wednesday, trading with a mild upside bias and reaching $4,763 in the European session, marking its highest level in nearly two weeks before settling around $4,725 at the time of writing [1]. The rally was fueled by growing optimism that the US-Israel war with Iran could end soon, following comments from US President Donald Trump, who stated that the United States 'will be leaving Iran very soon' and that military action could conclude within 'two or three weeks,' regardless of whether a deal is reached [1]. Iranian President Masoud Pezeshkian also signaled willingness to end the conflict, seeking guarantees to prevent future hostilities [1].
Improved risk sentiment across financial markets was observed, with oil prices remaining elevated compared to pre-conflict levels and the US Dollar retreating from recent highs, which contributed to the lift in bullion prices [1]. However, persistent tensions around the Strait of Hormuz continue to support inflation concerns and risks to economic growth, reinforcing expectations that central banks, particularly the Federal Reserve, may keep interest rates higher for longer. The CME FedWatch Tool indicates that markets expect the Fed to maintain rates at 3.50%-3.75% through 2026, which could limit strong follow-through buying in gold due to the higher opportunity cost of holding non-yielding assets [1].
Recent US economic data showed the ADP Employment Change rose by 62K in March, surpassing expectations of 40K but easing from the previous reading of 66K (revised from 63K). Retail Sales increased by 0.6% in February, above the forecast of 0.5% and rebounding from a revised -0.1% decline in January [1]. These data points suggest resilience in the US economy, which may influence the Fed's monetary policy outlook.
Looking ahead, speeches from Fed officials, including St. Louis Fed President Alberto Musalem and Fed Governor Michael Barr, are expected to provide further cues on monetary policy. Additionally, Donald Trump is scheduled to address the nation at 01:00 GMT on Thursday with an important update on Iran [1]. Technical analysis indicates that XAU/USD is gaining traction after breaking out of an ascending triangle pattern and climbing above the 50-period SMA, with prices now testing resistance at the 100-period SMA near $4,746. Momentum indicators such as the RSI (rising toward 69) and MACD (above its signal and zero line) support the upside [1].
CONCLUSION
Gold's recent surge reflects optimism over a potential resolution to the US-Iran conflict and improved risk sentiment, though elevated oil prices and persistent geopolitical risks continue to support inflation concerns. Market participants are closely watching upcoming Fed speeches and Trump's scheduled address for further direction. The outlook for gold remains tied to geopolitical developments and central bank policy expectations.