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Gold prices (XAU/USD) rose to a four-day high near $4,580 during the Asian session on Monday, driven by renewed hopes of diplomatic progress between global powers and Iran. The U.S. dollar weakened as investors anticipated potential easing of tensions, which traditionally boosts gold's appeal as a safe-haven asset. Market analysts noted that while the immediate technical outlook for gold appears positive, key resistance levels around $4,600 could cap further gains. The U.S. Dollar Index (DXY) fell below 103.50, reflecting reduced demand for USD amid geopolitical optimism.
The move in gold highlights the interplay between geopolitical developments and currency markets. A weaker USD typically supports gold prices, as the precious metal is priced in the greenback. Traders are closely monitoring whether diplomatic negotiations will lead to concrete outcomes that could further de-escalate tensions, potentially shifting capital flows. Central bank policies and inflation data remain secondary factors, but the immediate focus remains on geopolitical risk assessments.
For Gulf investors, the USD's performance is critical given the region's reliance on the dollar for trade and reserves. If diplomatic progress stalls, gold could face downward pressure, testing support near $4,500. Conversely, sustained USD weakness might push gold toward $4,700. Traders should watch the U.S. Federal Reserve's policy signals and weekly gold ETF holdings for additional clues.
