• Gold attracts some buyers as the US-Iran ceasefire extension undermines the USD.
• A standoff over the Strait of Hormuz could limit USD losses and cap the commodity.
• A less dovish Fed also supports the USD and warrants caution for the XAU/USD bulls.

Gold (XAU/USD) gains some positive traction during the Asian session on Wednesday and moves away from a one-week low, around the $4,669-$4,668 region, touched the previous day. The US Dollar (USD) edges lower in reaction to a temporary extension of the US-Iran ceasefire, turning out to be a key factor that offers some support to the commodity. Investors, however, remain worried about prolonged disruptions in the Strait of Hormuz. This, along with expectations for a less dovish US Federal Reserve (Fed), could limit deeper USD losses and cap the non-yielding yellow metal.

US President Donald Trump announced on Tuesday that he would indefinitely ​extend the ceasefire with Iran to allow the two countries to continue peace talks ‌to end the war. That said, Tasnim News Agency, affiliated with Iran's Revolutionary Guards, reported that Iran had not asked for a ceasefire ​extension. Furthermore, signs of friction between the US and Iran remained due to the American naval blockade of Iranian ports. In fact, Trump said that he would keep up the pressure on Iran by maintaining the blockade. However, Iran wants the US to lift its blockade before peace talks can restart. This keeps geopolitical risks in play and might continue to benefit the USD's reserve currency status.

Meanwhile, comments from Fed Chair nominee Kevin Warsh at a Senate confirmation hearing on Tuesday were interpreted as slightly hawkish. Warsh tried to assure US senators that he ​would act independently of the White House while pursuing broad reforms and stated that he had made no promises to President Donald Trump over cutting interest rates. Adding to this, strong US Retail Sales data provided an upbeat view on the strength of the American economy and prompted economists to upgrade their growth estimates for the first quarter. This might further hold back the USD bears on the sidelines, warranting some caution before positioning for any further appreciating move for the Gold price.

Moving ahead, there isn't any relevant market-moving economic data due for release from the US on Wednesday, leaving the USD at the mercy of geopolitical headlines. Fresh developments surrounding the US-Iran saga might continue to infuse volatility in the financial markets and produce some trading opportunities around Gold. Nevertheless, the aforementioned fundamental backdrop suggests that some follow-through buying is needed to back the case for the resumption of the XAU/USD pair's move up witnessed over the past month or so.

XAU/USD 4-hour chart

Gold might struggle to capitalize on the move up amid a bearish technical setup

From a technical perspective, last week's failure ahead of the $4,900 mark and the subsequent slide warrant caution for the XAU/USD bulls. Furthermore, the Relative Strength Index (RSI) is hovering near a neutral 46 and suggests lacklustre upside momentum. Adding to this, the Moving Average Convergence Divergence (MACD) indicator is in negative territory, suggesting that bullish attempts could remain gradual while corrective pressures linger.

The precious metal is currently pressing against a confluence hurdle – comprising the 100-period Exponential Moving Average (EMA) on the 4-hour chart and the 61.8% Fibonacci retracement of the March downfall. This configuration keeps the near-term bias cautiously bearish. Meanwhile, initial support is the 50.0% level at $4,754.02. A sustained break below this would expose the 38.2% Fibo. retracement floor at $4,595.95 and open a deeper corrective phase if bearish pressure persists.

On the flip side, momentum beyond the $4,760-$4,765 confluence is followed by a more meaningful hurdle at the 61.8% Fibo. retracement near $4,912.08, where sellers would likely reassert control if tested.

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