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Today, Friday, gold (XAU/USD) is maintaining upward momentum and trading near its highest level in more than two weeks, recorded the previous day. Despite renewed tensions in the Strait of Hormuz, market participants appear to be counting on a possible peace agreement between the U.S. and Iran. This has triggered another decline in oil prices, easing inflation risks and reducing expectations of tighter monetary policy from the U.S. Federal Reserve. As a result, this environment is limiting the strengthening of the U.S. dollar and acting as one of the key factors supporting gold prices.
On Thursday, U.S. Central Command reported strikes on Iranian military facilities allegedly involved in attacks on ships passing through the strategically important strait. Earlier, Iran accused the U.S. of violating the ceasefire by carrying out strikes on several targets in the strait region. At the same time, U.S. President Donald Trump emphasized that the ceasefire with Iran remains in effect, adding that any termination of it would be obvious. Additionally, the U.S. stated that it has no intention of further escalation, which weakened the U.S. dollar and contributed to the rise in gold prices. Meanwhile, recent developments have prevented oil prices from fully maintaining Thursday's intraday gains, although downside pressure remains limited due to ongoing geopolitical uncertainty.
Moreover, Trump warned that the U.S. could launch much larger and harsher strikes if Iran does not agree to sign a deal in the near future. At the same time, resilient economic growth and inflation risks are forcing investors to push back expectations for Fed rate cuts to late 2027 or early 2028. This, in turn, could limit further weakening of the U.S. dollar and restrain gold's upward potential, especially ahead of the release of U.S. labor market data.
The key Nonfarm Payrolls (NFP) report will be released later during the North American session; economists expect the economy to have added around 62,000 jobs in April. This would mark a significant slowdown compared to March's figure of 178,000. Meanwhile, the unemployment rate is expected to remain at 4.3%, while average hourly earnings are forecast to rise 3.8% year-over-year. These indicators will continue shaping expectations regarding the Fed's future actions, which in turn will influence the U.S. dollar's dynamics and set a new direction for gold prices.
From a technical perspective, the XAU/USD pair maintains a bullish bias, as the Relative Strength Index (RSI) has moved into positive territory on the daily chart.
At the same time, prices are attempting to hold above the 20-day SMA, which is located near the round $4,700 level. The next target will be the convergence of the 50-day and 100-day SMAs ahead of the round $4,800 level.
However, if prices fall below the 20-day SMA, support could emerge at the 9-day EMA, followed by the round $4,600 level, though this would strengthen bearish momentum.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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