Gold Price Forecast: XAU/USD stays near $3,950, retaining Monday’s gains amid hopes of a US-Iran deal

Gold holds near Monday’s high around $3,950 as oil prices ease.
Negotiations with Iran remain President Trump’s preferred course, US officials have indicated.
The US Midterm elections and major economic releases are firmly in investors’ focus.

Gold is holding on to the previous day’s recovery near $3,945 during Tuesday’s Asian session, supported by softer oil prices as hopes persist for an agreement between the United States (US) and Iran. Despite the recovery, the metal remains near its yearly low of $3,870.23, recorded on Friday.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

WTI Oil is trading near $95.00 at the time of writing, retaining the previous day’s losses. Friday’s five-month high of $104.03 is now well above prevailing oil prices following a substantial retreat.

In theory, a correction in oil prices helps anchor inflation expectations, reducing concerns that central banks will keep interest rates elevated for longer. Non-yielding assets such as Gold benefit from this backdrop.

Why Have Hopes for a US-Iran Deal Strengthened?

A preference for reaching an agreement with Iran rather than restarting military action has emerged from remarks by several United States (US) officials about President Donald Trump’s position.

Speaking over the weekend, US Secretary of State Marco Rubio said Washington had taken no decision to resume strikes on Tehran. He added that President Donald Trump favoured a diplomatic solution.

According to The Associated Press (AP), US Vice President JD Vance said on Monday that he had just spoken with President Trump about the Iran talks. Vance said, “the president and I both feel pretty good about the prospects for potentially coming to a negotiated settlement,”

Separately, Iran’s Islamic Revolutionary Guard Corps (IRGC) reported intercepting and bringing down two US MQM-170 drones south of Qeshm Island in the Strait of Hormuz, and destroying the 55th US MQ-9 drone east of the Hormuz Strait. Oil prices, however, appear to have seen no meaningful reaction to the attack.

Which Upcoming Events Could Drive Gold?

The US Midterm elections and a series of employment indicators will provide the main triggers for Gold this week, with September’s Nonfarm Payrolls (NFP) figures particularly in focus.

For FX markets, ING’s Chris Turner identifies the US midterm elections as this week’s principal event risk. Betting markets, he notes, now assign the Democrats a “70-72% chance of taking both the House and the Senate.” In his view, a clean sweep by the Democrats would likely “lead to gridlock on the debt ceiling, a prolonged government shutdown next year and could encourage President Trump to pursue an even more activist foreign policy agenda.”

Attention later in the day will turn to September’s US JOLTS Job Openings figures, due at 15:00 GMT. Estimates suggest employers in the US posted 7.13 million new job openings, marginally above August’s 7.097 million.

Gold Technical Analysis: Can the Bearish Bias Ease?

On the daily chart, XAU/USD is quoted at $3,935.94, below the 20-period Exponential Moving Average (EMA) of $4,063.86. This positioning maintains a bearish near-term outlook. With the short-term trend indicator continuing to cap the metal, recovery attempts remain vulnerable as sellers retain control.

At 36.24, the Relative Strength Index (14) is only just above oversold territory. The reading points to weak yet continuing downward pressure, rather than a clear exhaustion of the decline.

The first resistance on the upside is the 20-period EMA at $4,063.86. A daily close beyond that level would be required to relieve immediate bearish pressure and create scope for a more durable recovery. On the downside, the yearly low of $3,870.23 provides crucial support. A decisive breach would leave Gold exposed to $3,800 and then $3,700.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Gold: Frequently Asked Questions

What makes Gold an investment choice?

Throughout human history, Gold has served extensively as both a store of value and a medium of exchange, giving it an important role. Beyond its lustre and use in jewellery, the precious metal is now widely regarded as a safe-haven asset, or an attractive investment during periods of turmoil. Its independence from any particular issuer or government also underpins its widespread use as a hedge against inflation and currency depreciation.

Which buyers hold the most Gold?

The largest holders of Gold are central banks. To help support their currencies during unsettled periods, they typically diversify reserves and purchase Gold, reinforcing perceptions of economic and currency strength. Substantial Gold reserves can bolster confidence in a country’s solvency. World Gold Council data show that central banks increased their reserves by 1,136 tonnes of Gold, valued at around $70 billion, in 2022. That marked the largest annual purchase since records began. Emerging-economy central banks, including those in China, India and Turkey, are rapidly expanding their Gold reserves.

How does Gold move relative to other assets?

The US Dollar and US Treasuries, both key reserve and safe-haven assets, have an inverse correlation with Gold. A weakening Dollar generally supports Gold, allowing investors and central banks to diversify their holdings during turbulent periods. An inverse relationship also exists between Gold and risk assets: rising equity markets typically put pressure on Gold prices, whereas selling in riskier markets tends to support the precious metal.

Which factors influence Gold prices?

Many factors can drive Gold prices. Its safe-haven appeal means geopolitical turmoil or concerns about a severe recession can trigger a rapid rise. Since Gold pays no yield, lower interest rates generally support it, while a higher cost of borrowing usually weighs on the metal. Nevertheless, movements in the US Dollar (USD) explain most price changes because Gold is quoted in dollars (XAU/USD). Dollar strength tends to restrain Gold prices, while a weaker Dollar is likely to lift them.