Gold (XAU/USD) edged higher on Monday, trading around $4,691 after rebounding from an intraday low near $4,600, as the US Dollar softened amid improving market sentiment driven by diplomatic efforts to end the US-Iran war [1]. According to Axios, the US and Iran, along with regional mediators, are discussing a potential 45-day ceasefire, citing four US, Israeli, and regional sources with knowledge of the talks [1]. Reuters reported that both Washington and Tehran have received a plan for a two-step deal to end hostilities, which could come into effect as early as Monday and reopen the Strait of Hormuz [1]. Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, stated that Tehran has formulated its diplomatic response to the US and will announce it in due course, according to SNN [1].
US President Donald Trump threatened to carry out strikes on power plants and other civilian infrastructure if the Strait of Hormuz is not reopened and no deal is reached by Tuesday, 8:00 p.m. Eastern Time [1]. While markets remain cautious about whether a final deal will be reached, ongoing diplomatic efforts are helping ease immediate tensions. Oil prices have pulled back slightly from recent highs but remain elevated compared to pre-war levels, keeping inflation risks and concerns about global economic growth in focus [1].
Markets are increasingly expecting major central banks, particularly the Federal Reserve, to keep interest rates higher for longer, or even raise them, which is limiting Gold’s upside as higher yields reduce the appeal of the non-yielding metal [1]. In the near term, market moves are likely to hinge on incoming US economic data, Fed signals, and geopolitical developments. The US economic calendar this week includes the Consumer Price Index (CPI) and Personal Consumption Expenditures (PCE) Price Index, which will provide further insight into the inflation outlook and the Fed’s monetary policy path, following last week’s stronger-than-expected Nonfarm Payrolls (NFP) report. Later in Monday's American session, the ISM Services Purchasing Managers Index (PMI) will be in focus [1].
From a technical perspective, momentum indicators for XAU/USD are showing early signs of recovery, with the pair attempting to stabilize above the 100-day Simple Moving Average (SMA) at 4,654, which is now acting as immediate support. A sustained hold above this level could pave the way for further gains [1].
CONCLUSION
Gold prices have risen amid improving sentiment driven by US-Iran ceasefire talks, though elevated oil prices and expectations of higher interest rates are limiting further upside. Market participants are closely watching upcoming US economic data and Fed signals for direction. The technical outlook for XAU/USD is improving, with key support levels being tested.