XAU/USD hovers below $4,850 with US-Iran peace talks in focus

• Gold keeps hovering near recent highs, with resistance in the $4,850 area capping bulls.
• Investors’ optimism about the outcome of the US-Iran peace talks keeps precious metals buoyed.
• XAU/USD is trapped within a horizontal channel between $4,600 and $4,850.

Gold’s (XAU/USD) remains practically flat, at $4,790 at the time of writing on Friday, lacking a clear bias after pulling back from one-month highs, at $4,871 earlier this week. Precious metals are consolidating recent gains on Friday, supported by a mild US Dollar weakness as investors await developments from the US-Iran peace talks.

News from Iran and the US are diverging, but the market is sticking to US President Donald Trump’s positive comments. He announced a 10-day ceasefire between Lebanon and Israel on Thursday and affirmed that a deal with Iran is “very close”, which has boosted expectations about the peace talks that will resume in Pakistan this weekend.

Reuters, however, has released a report citing Iranian sources that suggests that negotiators from the US and Iran have scaled back expectations for a lasting peace agreement and are now seeking a “temporary memorandum” to avoid further escalation of the conflict.

Technical Analysis: Indicators hint at a weaker bullish momentum

XAU/USD treads water just below the top of the last two weeks’ trading range between $4,600 and $4,850, although technical indicators in the four-hour chart show a fading bullish momentum. The Relative Strength Index (RSI) is flirting with the 50 line, showing a lack of directional pressure, while the Moving Average Convergence Divergence (MACD) is negative and declining. All this hints at a waning bullish momentum and leaves Gold vulnerable to further consolidation.

Initial resistance emerges at the horizontal barrier above $4,850, which capped bulls on April 8,15 and 16. A bullish move above here brings the previous support-turned-resistance right above $5,000 into focus. Further up, the next target would be the March 10 high, at $5,238.

On the downside, Wednesday’s and Thursday’s lows around $4,775 are holding downside attempts for now. The key support level, however, is the bottom of the recent range around $4,600. A confirmation below here negates the near-term bullish view and exposes the March 26 lows at the $4,350 area.