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Gold prices (XAU/USD) extended their rebound on Friday as traders weighed optimism about a potential US-Iran deal against the Federal Reserve’s hawkish stance. The precious metal rose to $4,530 after hitting a two-month low of $4,366 earlier in the week. The US-Iran diplomatic developments and geopolitical tensions in the Middle East have historically driven safe-haven demand for gold, while the Fed’s recent signals of higher-for-longer interest rates have capped its upside.
The mixed signals highlight the delicate balance between geopolitical risks and monetary policy expectations. Traders are closely monitoring how the Fed’s tightening cycle interacts with regional tensions, as both factors could influence gold’s direction. A resolution in US-Iran relations might reduce safe-haven demand, while prolonged Fed hawkishness could weaken gold’s appeal against the dollar.
For markets, the coming weeks will be critical. Investors should watch for updates on US-Iran negotiations and Fed officials’ comments on inflation and rate policy. Geopolitical developments in the Gulf and the dollar’s strength will also shape gold’s trajectory. Traders may find opportunities in volatility but must remain cautious about the Fed’s potential to override geopolitical-driven moves.
