• US-Iran deal hopes pressure Oil, easing global inflation risks.
• Chicago PMI jump signals renewed strength in US manufacturing.
• Fed hike bets fade, but sticky Core PCE remains.

Gold (XAU/USD) price advanced more than 1.50% on Friday amid news that Iran and the US are close to signing a deal aimed at extending the ceasefire for 60 days to allow negotiations on Iran’s nuclear program. At the time of writing, XAU/USD trades at $4,563, after bouncing off daily lows of $4,489.

XAU/USD jumps as ceasefire hopes ease inflation fears

Sources familiar with thenegotiations revealed that if an agreement is reached, the Strait of Hormuz will reopen and the US Navy will lift its blockade, allowing the free passage of vessels through the strait. Meanwhile, US President Donald Trump said that he would be in the Situation Room “to make a final determination” about the agreement. Reuters reported that a senior Iranian source said a political understanding on the war has been reached between the two sides, but it is not yet finalised.

The news pushed Oil prices lower, as West Texas Intermediate (WTI) lost over 1.50%, with traders seemingly confident of a diplomatic ending, which would free petrol sitting near the Persian Gulf and ease a global energy shock.

Consequently, inflationary pressures would be tempered, relieving major central banks worldwide, which are considering tightening policy due to the jump in energy prices.

Data-wise, the US economic docket showed that the trade deficit narrowed and that business activity in the Midwest is back in expansionary territory. The Chicago Purchasers Managers’ Index (PMI) rose to 62.7 in May from 49.2 the previous month, surpassing the 50.5 forecast and indicating that the manufacturing sector is gaining steam.

A day ago, economic data showed that the US economy is losing momentum, as first-quarter 2026 GDP dipped to 1.6% from the initial estimate of 2%. On the contrary, inflation continues to edge higher as the Federal Reserve’s (Fed) preferred inflation gauge, the core PCE Price Index, rose by 3.3% YoY in April, up from 3.2% in March.

Money markets have trimmed hawkish bets on the Federal Reserve and now expect the US central bank to hold rates unchanged, with odds of a rate hike around 42%, according to Prime Terminal data.

Meanwhile, Fed officials crossed the wires, with San Francisco Fed Mary Daly saying that it is “important for the Fed to restore price stability, but not at the expense of harming the economy.” Her colleague, Philadelphia Fed President Anna Paulson, said inflationary pressures are weighing on the economy, making it tough for firms to plan for the future.

Earlier, Fed Governor Michelle Bowman said that disinflation has slowed and that she might change the policy stance if inflation driven by the war persists. Meanwhile, Kansas City Fed's Jeffrey Schmid indicated that the US central bank must think about ways to tighten monetary policy further, cautioning against viewing the Oil shock as temporary.

Next week, Gold traders will eye the release of the ISM Manufacturing and Services PMIs and the release of May’s Nonfarm Payrolls.

XAU/USD technical analysis: Gold price clears $4,500, eyes on 20-day SMA

Gold price clearly reclaimed the $4,500 level and the downward resistance trendline, opening the door to challenge key resistance levels.

Buyers are gaining momentum, as the Relative Strength Index (RSI), although bearish, is rising, a signal of further upside.

The 20-day Simple Moving Average (SMA) serves as the first level of resistance at $4,588, followed by $4,600. Above this lies the 50-day SMA at $4,630, followed by the 100-day SMA at $4,798.

Downwards, if XAU/USD dives below $4,500, the first support would be $4,450, opening the door to the 200-day SMA at $4,399, followed by the intraday low at $4,366.