Iran Diplomacy Hopes Lift Gold, Upside Remains Limited
Gold (XAU/USD) started the week on a positive note, rising to a four-day high of US$4,580 during Monday's Asian session. The main boost came from growing hopes for a US-Iran peace deal, which weighed on the dollar and bolstered safe-haven assets like gold.
An Axios report cited US officials as saying the two sides were close to an agreement that would include a 60-day ceasefire extension, with the Strait of Hormuz potentially reopened. President Donald Trump also stated that the framework for the deal had been "largely" negotiated, which helped improve risk appetite.
The knock-on effect was seen in the energy and bond markets: weakening oil prices eased inflation concerns, sending US Treasury yields sharply lower, especially in a climate of thinner liquidity due to the global market holiday. The combination of weaker yields and a depressed dollar provided a supportive backdrop for gold's rally.
However, gold's upside is considered limited due to several restraining factors. Trump asserted that his team would not "rush" into finalizing a deal, and the US naval blockade of Iran-linked ports remains in place until a formal agreement is certified. At the same time, significant disagreements regarding Iran's nuclear program have the potential to limit market optimism.
Furthermore, expectations of a hawkish Fed policy stance are also holding back further dollar weakness, preventing gold from breaking through the upper limit of its weekly range. Technically, this situation suggests the market is likely awaiting follow-through buying to ensure gold forms a short-term bottom around US$4,450 (the lowest level since late March, touched last week), before confirming a more sustained upward trend. (asd)
Source: Newsmaker.id
