Gold Price Forecast: US-Iran deal hopes support XAU/USD near $3,950 as it retains Monday’s gains

• Lower oil prices leave Gold trading near Monday’s high of around $3,950.
• Negotiations with Iran are President Trump’s preferred course, US officials have indicated.
• The US midterm elections and major economic releases are in sharp focus for investors.

With oil prices under pressure from hopes of a United States (US)-Iran agreement, Gold is holding on to the previous day’s recovery around $3,945 during Tuesday’s Asian session. Nevertheless, the metal remains near the yearly low of $3,870.23 reached on Friday.

WTI Oil is trading near $95.00 at the time of writing, retaining the previous day’s losses. The pullback in oil prices has been substantial since Friday’s five-month high of $104.03.

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

US officials’ comments lift hopes of an Iran deal

A preference for an agreement with Iran rather than renewed military action has emerged from comments by several United States (US) officials about President Donald Trump’s position.

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

According to The Associated Press (AP), US Vice President JD Vance said on Monday that he had just discussed the Iran talks with President Trump, adding that “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, as well as the destruction of the 55th US MQ-9 drone east of the Hormuz Strait. The attack, however, appears to have had no material effect on oil prices.

Gold awaits US elections and employment releases

The US midterm elections and a series of employment-related releases are set to provide the main catalysts for Gold this week, with September’s Nonfarm Payrolls (NFP) report particularly important.

For ING’s Chris Turner, the US midterm elections represent this week’s principal event risk for FX. He points to betting markets assigning the Democrats a “70-72% chance of taking both the House and the Senate.” In his view, a clean sweep by the Democrats 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.”

September’s US JOLTS Job Openings figures, due at 15:00 GMT later in the day, will also draw investors’ attention. Estimates suggest US employers advertised 7.13 million new jobs, a modest increase from August’s 7.097 million.

Gold Remains Under Pressure in Technical Trading

At $3,935.94 on the daily chart, XAU/USD retains a bearish near-term outlook, trading beneath the 20-period Exponential Moving Average (EMA) of $4,063.86. Sellers remain in control while this short-term trend gauge caps the metal, leaving attempted advances vulnerable.

With a reading of 36.24, the Relative Strength Index (14) is just above oversold territory. This points to subdued but continuing downward pressure, rather than clear signs that the decline has run its course.

The 20-period EMA at $4,063.86 provides the first resistance level. A daily close above it would be required to relieve immediate bearish pressure and pave the way for a more durable recovery. On the downside, the yearly low of $3,870.23 remains crucial support. A clear break beneath that level 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.)