Near $3,950: Gold price forecast as XAU/USD retains Monday’s gains on US-Iran deal hopes

$3,950 remains in sight for Gold. The metal trades near Monday’s high as oil prices soften.
Negotiations with Iran are President Trump’s preferred option, US officials have indicated.
US Midterm elections and major economic data are in focus for investors.

Gold holds around $3,945 in Tuesday’s Asian session. The metal retains the previous day’s recovery as prospects for a United States (US)-Iran agreement weigh on oil prices. Even so, Gold remains near the yearly low of $3,870.23 reached on Friday.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Near $95.00 at the time of writing, WTI Oil is holding the previous day’s losses. Crude has pulled back sharply from Friday’s five-month high of $104.03.

In theory, a correction in oil prices helps anchor inflation expectations, reducing concerns that central banks will keep interest rates elevated for longer. Non-yielding assets such as Gold benefit from that backdrop.

US-Iran Deal Hopes Strengthen on Diplomatic Signals

A deal with Iran, rather than renewed military action, appears to be President Donald Trump’s priority, according to comments from several United States (US) officials.

Speaking over the weekend, US Secretary of State Marco Rubio said Washington had not decided to resume strikes on Tehran. He added that President Donald Trump favours a diplomatic solution.

The Associated Press (AP) reported that US Vice President JD Vance said on Monday he had just spoken with President Trump about negotiations with Iran. Vance said “the president and I both feel pretty good about the prospects for potentially coming to a negotiated settlement,”

Separately, Iran’s Islamic Revolutionary Guard Corps (IRGC) reported the interception and downing of two US MQM-170 drones south of Qeshm Island in the Strait of Hormuz. It also reported the destruction of the 55th US MQ-9 drone east of the Hormuz Strait. Oil prices, however, appear largely unaffected by the attack.

US Midterm Elections and Jobs Data Set Gold’s Agenda

US Midterm elections and a series of employment indicators will provide this week’s main catalysts for Gold. Among the data releases, September’s Nonfarm Payrolls (NFP) report will be particularly important.

For FX markets, ING’s Chris Turner identifies the US midterm elections as this week’s main event risk. Betting markets now assign the Democrats a “70-72% chance of taking both the House and the Senate.” In his view, a Democrat clean sweep would probably “lead to gridlock on the debt ceiling, a prolonged government shutdown next year and could encourage President Trump to pursue an even more activist foreign policy agenda.”

Due at 15:00 GMT later in the day, September’s US JOLTS Job Openings figures will draw investors’ attention. Estimates put fresh job postings by US employers at 7.13 million, marginally above August’s 7.097 million.

$3,870.23 Support in Focus: Gold Technical Outlook

At $3,935.94 on the daily chart, XAU/USD retains a bearish short-term outlook. Price remains below the 20-period Exponential Moving Average (EMA) at $4,063.86. With this short-term trend gauge limiting gains, sellers retain control and recovery attempts remain vulnerable.

At 36.24, the Relative Strength Index (14) is only slightly above oversold territory. The reading points to subdued but continuing downward pressure, rather than clear evidence that the decline has run its course.

The 20-period EMA at $4,063.86 provides the first resistance level. Only a daily close above it would relieve immediate selling pressure and create scope for a more lasting recovery. On the downside, the yearly low of $3,870.23 is crucial support. A decisive breach would leave Gold exposed to $3,800 and then $3,700.

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

Gold: Key Questions Answered

What attracts investors to Gold?

Widely used both to preserve wealth and to facilitate exchange, Gold has held an important place throughout human history. Beyond its lustre and use in jewellery, the precious metal is now commonly regarded as a safe-haven asset, or an attractive investment in unsettled periods. Its independence from any particular issuer or government also underpins its widespread use as a hedge against inflation and currency depreciation.

Which buyers hold the largest Gold reserves?

The largest holders of Gold are central banks. To underpin their currencies during periods of turbulence, they typically diversify reserves and purchase Gold, reinforcing perceptions of economic and currency strength. Substantial Gold holdings can bolster confidence in a country’s solvency. World Gold Council data show that central banks increased their reserves by 1,136 tonnes in 2022, worth around $70 billion. No larger annual purchase has been recorded. Emerging-market central banks, including those in China, India and Turkey, are rapidly expanding their Gold holdings.

How does Gold move relative to other assets?

Both the US Dollar and US Treasuries are major reserve assets and safe havens, and Gold generally moves in the opposite direction to them. Dollar weakness tends to lift Gold, allowing investors and central banks to diversify holdings during turbulent periods. An inverse relationship also exists between Gold and risk assets. Equity rallies typically put pressure on Gold, whereas selling in riskier markets generally supports the precious metal.

Which factors drive Gold prices?

Many influences can shift Gold prices. Its safe-haven appeal means geopolitical unrest or concerns about a severe recession can trigger a rapid rise. Lower interest rates also tend to support the non-yielding metal, while more expensive borrowing usually weighs on it. Nevertheless, the US Dollar (USD) drives most price movements because Gold is denominated in dollars (XAU/USD). Dollar strength generally restrains Gold prices; a weaker Dollar is more likely to lift them.