Gold (XAU/USD) remains range-bound on Thursday as markets closely monitor developments surrounding the fragile ceasefire in the Middle East. At the time of writing, XAU/USD is trading around $4,750 after climbing to a three-week high above $4,800 a day earlier, as doubts over the durability of the US-Iran truce emerge.
Ceasefire doubts rise as Iran flags violations
Iran’s Parliament Speaker, Mohammad Bagher Ghalibaf, said that three parts of the ceasefire agreement had already been violated. His comments came after Israeli strikes on Lebanon. Iran says Lebanon is part of the ceasefire, while the US and Israel argue it is not. Tehran has warned it could pull out of the agreement if attacks on Lebanon continue.
Markets now await US-Iran negotiations, with the first round of talks scheduled for Saturday in Pakistan, with the goal of achieving a permanent ceasefire and reopening the Strait of Hormuz. Iran’s President Masoud Pezeshkian warned that attacks on Lebanon would undermine the ceasefire and render negotiations meaningless.
In the meantime, US President Donald Trump posted on Truth Social that US forces would “remain in place, and around, Iran, until such time as the REAL AGREEMENT reached is fully complied with.”
Rising oil and geopolitics complicate Fed rate path
Uncertainty over whether the two-week ceasefire will hold is weighing on market sentiment, with Crude prices rebounding after a sharp pullback, keeping inflation concerns alive and complicating the Federal Reserve’s (Fed) interest rate path.
Meanwhile, the Fed’s Minutes from the March meeting, released on Wednesday, highlighted a two-sided view. “Most participants,” said that a prolonged conflict in the Middle East could weaken labor market conditions, which may warrant additional rate cuts. At the same time, “many participants” flagged the risk of inflation staying elevated for longer, especially if Oil prices continue to rise, which could call for rate hikes.
Traders showed a muted reaction to the latest US economic data. Core Personal Consumption Expenditures (PCE) inflation rose by 0.4% MoM in February, in line with expectations, while the annual rate eased to 3.0% from 3.1%. Meanwhile, the final Q4 Gross Domestic Product (GDP) growth was revised down to 0.5% from 0.7%.
Attention now turns to the US Consumer Price Index (CPI) data due on Friday, with economists expecting the headline CPI to rise by 0.9% MoM, up from 0.3% in February, while annual inflation is seen accelerating to 3.3% from 2.4%.
Technical analysis: XAU/USD holds above 100-day SMA
In the daily chart, XAU/USD oscillates between its key moving averages, holding above the 100-day simple moving average (SMA) at $4,673.84 but remaining below the 50-day SMA at $4,914.57, which leaves the near-term tone broadly neutral after the recent pullback. The Relative Strength Index (RSI) at 49.33 is effectively flat around the midline, while the Average Directional Index (ADX) at 29.46 hints at a moderate but not dominant trend, suggesting price may continue to consolidate within this band until a decisive break emerges.
On the topside, immediate resistance is reinforced by the 50-day SMA at $4,914.57; a daily close above this barrier would reopen the path toward the prior highs and shift the bias back in favor of the bulls. On the downside, initial support is seen at the 100-day SMA near $4,673.84; a sustained drop below this latter level would expose XAU/USD to a deeper correction and signal that sellers are regaining control.
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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