Gold (XAU/USD) advanced on Thursday, trading around $4,497 and up 1.40% on the day, as the US Dollar weakened following news of a ceasefire between Israel and Lebanon brokered by the United States [2][3]. The ceasefire agreement requires a complete cessation of Hezbollah fire and the evacuation of Hezbollah operatives from the South Litani Sector, according to a joint statement from the United States, Lebanon, and Israel [2]. While the deal is seen as a positive step toward a broader US-Iran agreement, it remains pending confirmation from Hezbollah, and ongoing hostilities in the region continue to keep investors cautious [2][3].
The ceasefire and hopes for progress in US-Iran negotiations have pressured the US Dollar, providing a fresh impulse to precious metals like Gold, which reached session highs above $4,490 after bouncing from $4,425 earlier in the day [2][3]. Oil prices and the US Dollar have seen moderate declines following the agreement, although the lack of clarity and slow progress in US-Iran talks have limited stronger gains in Gold [2][3]. Technical analysis shows XAU/USD holding above the 200-day Simple Moving Average (SMA) near $4,427, but with momentum indicators such as the RSI below 50 and MACD negative, suggesting upside attempts may struggle to gain traction in the near term [2][3].
On the macroeconomic front, recent US data has been supportive for the Dollar, with ADP employment figures showing a larger-than-expected increase in net jobs in May and the ISM Services PMI highlighting solid business activity and high inflationary pressures [3]. This has fueled expectations that the Federal Reserve (Fed) may need to keep interest rates higher for longer or even consider further tightening, which is typically negative for Gold as it offers no yield [2][3]. The upcoming US Nonfarm Payrolls (NFP) report is expected to be a key catalyst for both Gold and the US Dollar, with markets projecting an 85K increase in jobs and the unemployment rate to remain at 4.3% [1].
Meanwhile, the New Zealand Dollar (NZD) rebounded against the US Dollar, with NZD/USD trading around 0.5880, up 0.28% on the day, supported by expectations of further rate hikes by the Reserve Bank of New Zealand (RBNZ) [1]. RBNZ Governor Anna Breman indicated that the Official Cash Rate could be increased sooner and by more than previously expected, as inflation risks and weak growth justify a cautious approach [1]. Markets are now pricing in multiple rate hikes throughout the year [1]. However, the upside for NZD may be limited as investors continue to favor safe-haven assets amid ongoing Middle East tensions [1].
Central bank demand for Gold remains steady, with the World Gold Council reporting net purchases of 17 tonnes in April after net sales in March [2]. Technical resistance for Gold is seen at $4,600 and the 100-day SMA near $4,798, while support lies at the 200-day SMA around $4,427 [2][3].
CONCLUSION
Gold and the New Zealand Dollar both benefited from geopolitical developments and central bank expectations, with Gold rising on a weaker US Dollar and NZD gaining on RBNZ rate hike bets. However, ongoing uncertainty in the Middle East and mixed US economic data have kept market sentiment cautious. The upcoming US Nonfarm Payrolls report is likely to be a key driver for both assets in the near term.