Gold tests 200-day EMA as US-Iran peace deal shifts rate outlook

Gold tested the 200-day exponential moving average near $4,340 an ounce on Wednesday, extending a recovery from a six-month low as the US-Iran peace deal eased rate-hike bets.

"The combination of lower oil prices and a softer dollar is providing gold with its best tailwind in recent weeks, though sustainability will depend on how durable the peace agreement proves to be," Tim Waterer, chief market analyst at KCM Trade, said.

Spot gold has recovered about 8% from the near six-month low hit last week, after falling roughly 20% since the start of the US-Israeli war against Iran in late February. Markets have scaled back expectations for a Federal Reserve rate hike in December to 47%, down from 69% last week, according to the CME FedWatch tool. The US dollar fell to a 10-day low, while oil prices slipped more than 4% after US and Iranian officials said they had agreed on a framework to end their war and reopen the Strait of Hormuz.

The 200-day EMA represents a key technical test for gold. A sustained break above the level could trigger further buying, while failure would signal the metal remains vulnerable. The Federal Reserve's policy meeting this week, the first under Chair Kevin Warsh, is the next major catalyst for prices. The peace deal is set to be formally signed on Friday in Switzerland.

Among other precious metals, silver rose 0.3% to $70.24 an ounce, platinum gained 1.7% to $1,797.31, and palladium firmed 0.7% to $1,357.72.

"Currency debasement concerns, fiscal risks and ongoing geopolitical fragmentation continue to underpin long-term demand for gold," OCBC said in a note. "A moderation in energy-led inflation could help these themes regain traction."

A record 45% of reserve managers surveyed by the World Gold Council expect to increase their institutions' gold holdings over the next 12 months, the organization said.

This article is for informational purposes only and does not constitute investment advice.