Gold (XAU/USD) maintains a moderately positive tone during the European session, though it remains below the 100-day SMA. The precious metal continues to show high sensitivity to geopolitical factors, and volatility is likely to remain elevated as investors react to developments in the armed conflict. This situation makes market participants cautious about forming long-term positions based on a sustained recovery from the technically significant 200-day simple moving average (SMA), located near the $4,100 level—an area corresponding to a four-month low.
According to media reports, active diplomatic efforts are underway to implement a temporary one-month ceasefire to allow the United States and Iran to agree on a roadmap for resolving the crisis. This follows a decision by U.S. President Donald Trump earlier this week to postpone planned strikes on Iran's energy infrastructure for five days, citing indirect negotiations—a move that strengthened expectations of de-escalation in the Middle East. Additionally, Trump stated that Tehran had made a "gesture of goodwill" related to ensuring stable transit of energy resources through the Strait of Hormuz.
Rising optimism is lowering oil prices and easing inflation expectations, thereby reducing the need for aggressive action by central banks and supporting demand for non-yielding gold. At the same time, military activity remains high: Israel continues strikes on Iranian territory, and the United States is increasing its military presence in the region, deploying several thousand troops from the 82nd Airborne Division. In response, Tehran has launched new missile strikes on Israel, while Gulf countries have reported multiple interceptions of drones and missiles amid escalating hostilities in Lebanon and Iraq. This environment maintains market tension and prevents a significant correction in oil prices.
In addition, investors continue to factor in inflation risks driven by persistently high energy prices and uncertainty regarding the future path of interest rates. Together, these factors put pressure on gold prices. Meanwhile, market participants have almost fully priced in the probability of further rate cuts by the U.S. Federal Reserve, while also increasing expectations of rate hikes later in the year. A hawkish outlook from the Fed supports the U.S. dollar, which may also limit the upside potential of XAU/USD. In this context, it is reasonable to wait for a clear continuation of buying before confirming the formation of a short-term bottom and a transition to a sustained upward phase.
From a technical perspective, oscillators remain negative, indicating that bulls currently lack the strength to drive prices higher.
