Gold advances as US, Iran confirm deal to end war

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Gold price (XAU/USD) rises to a weekly high during the Asian trading hours on Monday. The precious metal rebounds after the United States (US) and Iran had reached a deal to end their conflict, easing concerns about inflation and higher interest rates.

Gold price attracts some buyers to a weekly high in Monday’s Asian session.
US and Iranian officials said they had agreed on a peace framework for a deal to end their war.
The negative outlook remains intact, with the Gold price holding below the key 100-day SMA.

Washington and Tehran said on Sunday that they have reached an agreement that will take effect on Friday. US President Donald Trump stated that the US is lifting its naval blockade on Iranian ports and that the Strait of Hormuz will reopen after the agreement is signed.

Trump added that the agreement he reached with Iran would ultimately assure that the Strait of Hormuz is “permanently toll free,” per the New York Times. The United Kingdom (UK), France, Germany ‌and Italy said that the countries were prepared to lift sanctions on Iran in response to steps on its nuclear program after the US and Iran reached a deal to end their war. Hopes of a peace framework for a deal to end the US-Iran war provide some support to the yellow metal.

Meanwhile, Iran’s deputy foreign minister, Kazem Gharibabadi, said on Sunday that the 60-day negotiations between the US and Iran will hinge on the US meeting three commitments. Those commitments include “lifting and ending the naval blockade,” “ending the state of war and military operations,” and “releasing Iran’s frozen funds.”

Any signs of renewed tensions in the Middle East could lead to a rise in crude oil prices, stoking inflation concerns and raising expectations of interest rates staying higher for longer. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.

Markets have priced in nearly a 64% probability of a US Federal Reserve (Fed) interest rate hike in December this year after the peace deal, down from 69% last week, according to the CME FedWatch tool.

XAU/USD daily chart

Gold remains capped below the key 100-day SMA in daily chart

In the daily chart, XAU/USD remains in a corrective phase, holding well below the 100-day simple moving average (SMA) and also beneath the Bollinger middle band, which together suggest rallies are still capped within a broader downbeat structure. The Relative Strength Index (RSI) near 42 stays below the midline, hinting at subdued upside momentum and reinforcing the view that bounces are more likely to be sold into while price trades under these overhead levels.

On the topside, initial resistance emerges at the Bollinger middle band near $4,415, followed by the upper Bollinger band around $4,685, with the 100-day SMA higher up near $4,762 acting as a more strategic barrier if a stronger rebound unfolds.

On the downside, the first notable support is seen at the lower Bollinger band around $4,142, where a break would open the door to a deeper retracement toward prior lows, keeping the near-term bias tilted to the downside while price trades beneath the clustered daily resistance band.

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

Interest rates FAQs

What are interest rates?

Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

How do interest rates impact currencies?

Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.

How do interest rates influence the price of Gold?

Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.

What is the Fed Funds rate?

The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.