25.05.202610:58 Forex Analysis & Reviews: XAU/USD Price Analysis and Forecast

At the beginning of the European session on Monday, gold prices (XAU/USD) continue to fluctuate below the upper boundary of the range formed about a week ago. Weekend developments strengthened expectations of a potential peace agreement between the United States and Iran, weakening the U.S. dollar and supporting gold prices. Nevertheless, significant disagreements between the parties remain on key issues. Combined with expectations of a more aggressive ("hawkish") Federal Reserve policy, this is limiting the dollar's decline and restraining further gains in the non-yielding asset.

Late Saturday evening, Axios, citing a representative of the U.S. administration, reported that Washington and Tehran had moved closer to an agreement to extend the ceasefire for 60 days, during which shipping through the Strait of Hormuz is expected to resume. In addition, U.S. President Donald Trump stated that the key parameters of a peace agreement had already been largely finalized. This increased investors' risk appetite, while the subsequent decline in oil prices weakened inflation expectations and led to a noticeable drop in U.S. Treasury yields amid reduced liquidity conditions, as several global markets remained closed for holidays. As a result, the U.S. dollar came under additional pressure.

At the same time, Trump instructed his representatives not to accelerate the negotiation process, emphasizing that the naval blockade of Iranian ports would remain in place until a fully legally binding agreement is signed. Furthermore, ongoing disagreements over Iran's nuclear program continue to limit excessive market optimism. Expectations of Federal Reserve interest rate hikes in 2026 may also provide additional support for the dollar. Under these conditions, it would be prudent to wait for confirmation of sustained buying interest before discussing the formation of a short-term bottom in gold near $4,450 — the lowest level since late March, recorded last week.

From a technical perspective, the nearest resistance level for gold is located at $4,600, while strong resistance for bulls stands at $4,450. A breakout above this level would provide bulls with additional momentum for further gains. Support is located at the psychological level of $4,500 and at $4,450, below which the 200-day SMA and the 200-day EMA, converging into a single line, would provide additional support. As long as oscillators remain in negative territory, bears retain the advantage.