Gold is clinging to recovery gains above $4,750 early Tuesday, capitalizing on hopes for diplomacy between the United States (US) and Iran. However, concerns over the Strait of Hormuz still pose a downside risk for the bright metal.
Gold awaits a clear directional impetus
Gold builds on the previous rebound in Asia on Tuesday as risk sentiment remains in a sweet spot, weighing negatively on the safe-haven and reserve currency status of the US Dollar (USD).
The US Dollar Index (DXY) consolidates near six-week lows of 98.32, at the press time.
Markets remain optimistic about another round of US-Iran peace talks in the coming days, especially after the recent conciliatory remarks from US President Donald Trump and Vice President JD Vance.
Trump claimed Iran had made contact and wanted “very badly” to strike a deal in the face of his blockade of the Strait of Hormuz.
Trump added that the blockade had come into force at 10am ET on Monday, and the Iranians had subsequently got in touch.
Meanwhile, Vance noted that the US made a lot of progress in its weekend talks with Iran in Pakistan, emphasizing that “the ball is in Iran’s court.”
Adding to the market optimism, CNN News reported, citing a source, Trump administration officials are having internal discussions surrounding the details for a possible second meeting with Iran before the US-Iran ceasefire ends next week.
The Greenback also feels the heat from the uncertainty stemming from doubts over the US Federal Reserve’s (Fed) interest rate outlook amid the Mideast crisis.
Traders have sidelined recent US consumer inflation data as geopolitics continue to lead sentiment and Gold price action. Therefore, the Producer Price Index (PPI) report from the US due later on Tuesday could also be shrugged off.
That being said, further upside in Gold is likely to remain limited as buyers still appear hesitant amid lingering risks on Trump’s Strait of Hormuz gambit and its impact on Oil prices.
Also, the daily technical setup for Gold appears tricky, with bulls and bears fighting to have the upper hand, and hence, checking the upside in the bullion.
Gold price technical analysis: Daily chart
On the daily chart, XAU/USD is hovering around an upward-support trend line that now acts as a pivotal area after the recent pullback from record highs. Price holds above the 21-day and 100-day simple moving averages (SMAs) at roughly $4,664.58 and $4,694.48, suggesting underlying medium-term demand, but remains capped beneath the 50-day SMA at $4,902.29, which limits the topside. The Relative Strength Index (RSI) at 50.95 sits near the neutral line, hinting at balanced momentum as the market digests prior gains.
On the topside, initial resistance is located at the 50-day SMA at $4,902.29; a sustained break above this barrier would open the door to a broader recovery phase. On the downside, immediate support is seen around the current pivot region near $4,772.80, with additional underlying demand aligned at the 100-day SMA at $4,694.48 and the 21-day SMA at $4,664.58, while the 200-day SMA far below at $4,193.01 marks a deeper structural floor in case of an extended correction.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Producer Price Index (YoY)
The Producer Price Index released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Changes in the PPI are widely followed as an indicator of commodity inflation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).
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