Gold prices are experiencing a surge, rising nearly 3% to $4,337, as optimism surrounding the US-Iran agreement takes hold. This positive sentiment is driving risk trades higher, with US futures also benefiting from SpaceX's successful debut on Friday. However, the market's enthusiasm is tempered by the potential for oil prices to drop as the Strait of Hormuz reopens, which could improve the inflation outlook and benefit gold. The Federal Reserve's less hawkish stance and the broader outlook for central banks are significant factors in this recovery, especially after recent headwinds for gold. The chart shows a solid rebound from a brief break below the March low, forming a double bottom pattern that could favor gold buyers. However, a critical hurdle remains: the 200-day moving average at $4,450. Gold buyers need to break above this level to reverse the bearish bias established earlier this month. The recent drop below key technical levels since October 2023 further emphasizes the need for a strong rebound. The next phase of gold's trajectory depends on oil prices and the reopening of the Strait of Hormuz. While a gradual reopening is expected over the next 30 days, doubts remain about achieving full reopening and meeting US demands for pre-war levels. Iran's reporting history raises concerns about the accuracy of shipping data, which could impact market responses when actual price pressure developments differ from the narrative. The market's reaction to these developments remains uncertain, and only time will tell how gold prices will evolve in the face of these challenges.
