Gold prices entered the holiday-shortened week with a recovery target of $4,600 firmly in focus, with XAU/USD trading at approximately $4,578 heading into the Memorial Day weekend as the market weighed the impact of US-Iran peace deal optimism against a hawkish Federal Reserve and the technical overhang of multiple moving average resistances.
The Memorial Day closure of US equity and bond markets on Monday, May 25, is expected to amplify price swings in gold as liquidity thins significantly, creating conditions in which headline-driven moves on Iran peace deal news could produce exaggerated intraday volatility without the stabilising effect of normal institutional participation.
President Trump announced over the weekend that a Memorandum of Understanding with Iran is largely negotiated, a development that sent oil prices lower and reduced the geopolitical risk premium embedded in gold, as a resolution of the Strait of Hormuz closure would remove the key supply shock that has been supporting both energy prices and safe-haven demand.
Gold’s technical picture heading into the week is constructive but capped, with the metal trading below its 21-day, 50-day, and 100-day simple moving averages, which sit at approximately $4,608, $4,658, and $4,800 respectively, meaning that each of those levels represents resistance that buyers need to clear before a broader upside breakout can be confirmed.
The 14-day Relative Strength Index near 46 keeps short-term momentum in mildly negative territory, suggesting that recent bounces from the $4,520 area are likely corrective rather than the beginning of a new sustained advance, and that bulls need follow-through buying to validate the recovery narrative.
On the downside, immediate support is seen around the $4,520-$4,540 region, with deeper structural support at the falling wedge support line drawn from the $4,367 low, and the 200-day simple moving average near $4,307 representing the last significant technical floor before the broader bullish trend from the 2025 lows would be called into question.
The Federal Reserve’s policy stance has become a significant headwind for gold in recent weeks, with markets pricing approximately a 60% probability of a 25 basis point rate hike at the December 2026 meeting, a hawkish posture driven by inflation remaining above target at 3.3% annually and oil prices elevated by the Hormuz disruption.
Minutes from the April 28-29 Federal Open Market Committee meeting released this week revealed officials openly discussing whether rate hikes rather than cuts should be their next policy move if inflation remains persistently above the 2% target, a dovish pivot that gold investors had been hoping for now appearing increasingly remote.
Core Personal Consumption Expenditures inflation data, the Fed’s preferred gauge, is due on Friday May 29, and is expected to be the most significant economic release of the week for gold traders, with a hot reading likely to push XAU/USD back toward the lower end of its recent range and a softer print potentially providing the catalyst for a move above $4,600.
Pakistani mediation in the US-Iran talks, confirmed by a report from Al-Arabiya on Thursday that said a final draft agreement had been completed, briefly collapsed gold below $4,520 before the price recovered as the market determined no official announcement had yet been made, illustrating the binary and sentiment-driven nature of gold’s current trading environment.
