Gold Price Forecast: XAU Heads for 5K on US-Iran Deal Hopes and Soft US PCE, Awaiting NFP
Gold staged a powerful rebound late last week, recovering more than $200 from recent lows as investors weighed potential progress in US-Iran negotiations, softer inflation data, and the upcoming US nonfarm payrolls report.
Quick overview
- Gold rebounded over $200 from recent lows, driven by optimism in US-Iran negotiations and softer inflation data.
- Persistent inflation concerns and elevated Treasury yields initially pressured gold prices, pushing them down to key support levels.
- The potential for a US-Iran agreement could ease oil prices and inflationary pressures, impacting Federal Reserve policy and gold support.
- Attention is now on the upcoming US nonfarm payrolls report, which could influence expectations for future Fed easing or rate hikes.
Live GOLD Chart
Gold staged a powerful rebound late last week, recovering more than $200 from recent lows as investors weighed potential progress in US-Iran negotiations, softer inflation data, and the upcoming US nonfarm payrolls report.
Gold Recovers After Early-Week Weakness
Gold remained under pressure for much of last week as investors focused on persistent inflation concerns, elevated Treasury yields, and the possibility that the Federal Reserve may keep interest rates higher for longer. Expectations for rate cuts have continued to fade, while some market participants have even begun discussing the potential for future rate hikes if inflation remains stubbornly high.
Those factors initially weighed on precious metals, pushing spot gold down to the $4,366 area, where buyers emerged at a key technical support level. The metal then staged an impressive recovery during the final two trading sessions of the week, climbing back toward the $4,600 level and posting a gain of more than $200 from its lows.
Iran Negotiations Become a Key Market Driver
A major catalyst behind the rebound was renewed optimism surrounding negotiations between the United States and Iran. President Trump met with his national security team to discuss a potential agreement, although no final decision has been reached.
Reports over the weekend suggested that discussions would continue for at least another week. Earlier negotiations reportedly produced preliminary agreements involving an extension of the ceasefire, renewed talks over Iran’s nuclear program, and steps toward reopening the Strait of Hormuz. However, Tehran has emphasized that significant disagreements remain regarding sanctions relief, frozen assets, and nuclear commitments.
Markets interpreted the developments as a sign that diplomatic progress remains possible, reducing concerns about a prolonged escalation in the Middle East.
Oil Prices and Fed Expectations Remain Critical
The importance of a potential US-Iran agreement lies largely in its impact on energy markets. A successful deal could reduce risks to oil transportation through the Strait of Hormuz, potentially easing crude oil prices and lowering inflationary pressures globally.
Lower oil prices could, in turn, reduce pressure on the Federal Reserve to maintain restrictive monetary policy. That scenario would likely weigh on Treasury yields and the US dollar while providing additional support for gold.
Recent inflation data also offered some encouragement. Core PCE inflation came in slightly softer than expected, reinforcing hopes that inflation may gradually cool despite remaining above the Fed’s long-term target.
All Eyes on the US NFP Jobs Report
Attention now turns to Friday’s US nonfarm payrolls report, one of the most important economic releases of the month. Economists expect payroll growth of approximately 95,000 jobs, down from 115,000 previously, while the unemployment rate is forecast to remain at 4.3%.
A weaker-than-expected employment report could strengthen expectations for future Fed easing and provide further support for gold. Conversely, stronger labor market data could reinforce higher-rate expectations and limit the metal’s upside.
Technical Analysis—The Support Held
Technically, the correction was severe. Gold broke decisively below its 20-day simple moving average, ending a streak of consistent trend support. Attention quickly shifted to the 50-day moving average near $5,000 which was also broken and in late March we saw a decline below the early February low of $4,400, and XAU bottomed at $4,100.
Gold Chart Daily – Gold Rebounds Off the 100 SMA
Gold found support at the 100 SMA (red) which is the last technical indicator to provide support again last seek. As a result, Gold rebounded and climbed above $4,500 but buyers need to push above the moving averages for the uptrend to resume.
Gold Chart Weekly – The 50 SMA Held As Support
The ability to hold above $4,000 carries psychological importance. Reclaiming such a major round-number threshold often stabilizes sentiment, especially after a period of forced liquidation. While volatility remains elevated, the ability to defend longer-term trend support suggests that structural buyers remain active.
Conclusion
Gold enters the new week at a critical juncture. While inflation concerns and elevated interest rates remain headwinds, hopes for progress in US-Iran negotiations and softer economic data have improved sentiment. With oil prices, geopolitical developments, and Friday’s nonfarm payrolls report all in focus, traders are preparing for another potentially volatile week that could determine gold’s next major move.
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