Gold (XAU/USD) has maintained its recent gains, climbing to a four-day high around $4,580 during the Asian session on Monday, as optimism over a potential US-Iran peace deal pressured the US Dollar and contributed to a decline in oil prices [2]. Over the weekend, Axios reported that the US and Iran are close to signing an agreement involving a 60-day ceasefire extension and the reopening of the Strait of Hormuz, which would allow ships to pass freely and require Iran to clear mines, in exchange for the US lifting its blockade on Iranian ports [2][4]. US President Donald Trump stated that the framework for a peace deal with Iran was largely negotiated, but also instructed his representatives not to rush into a deal and said a naval blockade would remain until a formal agreement is signed [2][3]. However, Reuters, citing Iran’s Tasnimnewsagency, reported that the US is still obstructing certain clauses of the agreement, particularly regarding the release of blocked Iranian assets, and US Secretary of State Marco Rubio noted that a comprehensive nuclear deal could not be achieved quickly or carelessly [4].
The prospect of a deal has triggered a sharp decline in crude oil prices, with West Texas Intermediate (WTI) falling nearly 5.5% to around $90.80 per barrel, as reopening the Strait of Hormuz would relieve supply concerns for major Asian economies and lower global energy prices [4]. The resulting slump in oil prices has eased inflationary fears and led to a steep decline in US Treasury yields amid thin liquidity, as many global markets are closed for holidays [2][3]. This has weighed on the US Dollar, with the US Dollar Index (DXY) trading 0.3% lower near 99.00 [3].
Despite the positive undertone, gold remains capped below the top boundary of its recent range, with technical analysis indicating that XAU/USD is still within a downward parallel channel. Resistance is clustered near the $4,650 area, while support lies around $4,360; a break below this level could reinforce the broader bearish structure [2]. The market remains indecisive, torn between the influence of rising yields and ongoing geopolitical risks, with the upcoming PCE inflation report seen as a major catalyst that could dictate gold's next move [1].
Analysts advise monitoring the triangle pattern in gold closely, as a breakout is expected soon, potentially leading to significant volatility and a new trend direction [1]. While the MACD is above zero and the RSI is in the mid-50s, suggesting tentative recovery, the overall technical setup remains bearish and rallies are seen as vulnerable [2]. Bets that the US Federal Reserve will hike interest rates in 2026 could act as a tailwind for the USD, limiting gold's upside potential [2].
CONCLUSION
Gold prices are holding gains amid optimism for a US-Iran peace deal, which has weakened the US Dollar and sharply lowered oil prices. However, technical resistance and unresolved geopolitical and policy uncertainties are capping further upside, with the market awaiting the upcoming PCE inflation report for clearer direction. The overall market impact is high, as developments in the US-Iran negotiations and inflation data are likely to drive significant volatility in gold and related assets.