Gold rose over 3% on Wednesday to its highest level in nearly six weeks. The advance extended a third consecutive day of gains to approximately $4,230 an ounce, driven by fresh hopes for US-Iran peace talks and a possible deal to reopen the Strait of Hormuz, both of which eased inflation concerns and weighed on the dollar. Charts show the rally breaking through key resistance, though analysts say the advance still needs confirmation before it counts as a reversal.
The metal jumped over 3% on Wednesday, marking its highest level in nearly six weeks as easing Middle East tensions curbed inflation fears and pressured the dollar. It was a third straight session of gains, with the metal near $4,230 an ounce.
Peace hopes and a weaker dollar drive the move
Analysts tied the jump to a fresh wave of optimism over peace talks between the US and Iran, which eased inflation concerns and weakened the US dollar. The move ranked, so far, as the strongest market reaction gold has seen in more than one month.
A second catalyst is emerging optimism over reopening the Strait of Hormuz, a critical route for oil shipments, which has also diminished expectations of further Federal Reserve rate hikes. A weakening US dollar has added to the metal's appeal as a stable investment.
Chart breaks above $4203 resistance
The rally pushed gold through the $4203 range top, a level reinforced by the base of a falling, thickening daily Ichimoku cloud that had capped prices. The break generated bullish signals, and a daily Tenkan/Kijun-sen bull cross points to an improving near-term outlook.
Confirmation would still need a sustained break above these barriers, which could open the way to the next hurdle at $4304 — the Fibonacci 38.2% retracement of the move from $4889 to $3942 — a violation of which would signal a stronger reversal.
Resistance at 4304, support at 4166
Fresh gains are likely to meet headwinds near the $4200 zone as some investors book profits, but dips should hold above $4166 — a broken Fibonacci 23.6% retracement level — to keep the bulls in control. Resistance sits at 4261, 4304, 4387 and 4399, while support runs 4166, 4137, 4100 and 4066.
Geopolitical developments are likely to remain gold's key driver, with traders watching for any shift in tone from President Trump — whose past reversals have kept the market highly volatile.
Sources: ActionForex, Crypto Briefing
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