Gold (XAU/USD) rose more than 1% to around $4,450 during Friday's European trading session. The precious metal saw strong demand, even as statements from peace mediators contradicting US President Donald Trump's claims that Iran had requested a 10-day pause in planned military strikes on Iranian power plants revived fears of a protracted war in the Middle East.

According to a report in The Wall Street Journal, peace mediators denied claims that Iran had requested a temporary 10-day halt to attacks on its power plants. The mediators added that Iran has yet to give a final response to Trump's 15-point plan, which requires Tehran to reopen the Strait of Hormuz and abandon its missile program, but the likelihood of Iran agreeing to these conditions is extremely low.

In addition to the rift between the US and Iran, the Pentagon's deployment of up to 10,000 additional ground troops to the Middle East has also cast doubt on hopes of de-escalating conflicts in the region.

The fading prospects for de-escalation in the Middle East are expected to be a major factor in the decline of gold prices, given that the longer conflicts persist, the greater the likelihood of rising oil prices.

Global inflation expectations have accelerated as a result of higher oil prices, which has also led to hawkish statements from various central banks. Theoretically, these hawkish warnings reduce the appeal of non-income-generating assets like gold.

 

Gold Technical Analysis

The gold/US dollar pair (XAU/USD) is trading at a high of around $4,450 at the time of writing. The overall trend is bullish, with the price holding above the rising 200-day exponential moving average (EMA), which is near $4,220. The distance between the current price and the 200-day EMA continues to indicate an upward trend.

The pair has broken a series of higher closes and is now trading well below the mid-$5,000s, while the 14-day Relative Strength Index (RSI) at 32 shows firm momentum in a weak zone.

The immediate resistance level is near the high reached on March 25, around $4,600, followed by the $4,820 level, the most recent breakout level. If the price manages to break above $4,820, it could rise to around $5,000. In the event of a decline, the initial support level lies at the 200-day exponential moving average, at around $4,220, followed by the lowest level recorded by the price on March 23, at around $4,100.