Gold traded higher through the Asian morning and into the European session, supported by a softer US dollar even as broader risk sentiment improved on reports of further talks between the US and Iran.
XAU/USD climbed to a fresh session high of $4,579 in European trading before easing slightly to around $4,572 later in the day.
The move extended gold’s recovery from last week’s low near $4,450 and kept the metal close to an important technical resistance zone.
The rally came despite a more constructive tone across risk assets, which would normally reduce demand for traditional havens such as gold. Instead, pressure on the US dollar helped support bullion, with the greenback trading near the lower end of last week’s range.
Gold is priced in dollars, meaning weakness in the US currency can make the metal more attractive to overseas buyers.
That dynamic appeared to outweigh some of the decline in safe-haven demand linked to the prospect of continued US-Iran discussions.
Dollar weakness supports gold
The US dollar remained under pressure after failing to recover meaningfully from the bottom of last week’s trading range.
That limited one of the main headwinds for gold and helped the metal stay bid during the European session.
Gold’s rise came as investors assessed whether diplomatic engagement between Washington and Tehran could reduce geopolitical risks that had recently supported haven assets.
Reports of further talks between the two sides helped improve market sentiment, encouraging a moderate risk-on tone.
However, the weaker dollar softened the impact of reduced haven flows. As a result, gold continued to trade higher rather than retreating alongside easing geopolitical concerns.
The balance between these two forces remains central to the near-term outlook.
If the dollar weakens further, gold may remain supported even if geopolitical risk premiums fade. But a stronger rebound in the greenback could quickly cap upside momentum.
XAU/USD tests bullish pattern
Technically, traders are watching a developing inverted head and shoulders pattern on XAU/USD, which may signal a broader bullish continuation if confirmed.
The neckline of the pattern sits around $4,575, close to current trading levels.
A sustained move above that area would improve the near-term outlook and put last week’s range high of $4,590 back in focus.
A break above $4,590 would be viewed as a more meaningful bullish signal.
Such a move could open the way for a test of the former support zone around $4,640, which may now act as resistance.
Beyond that, May’s high near $4,770 would become the next upside target for buyers if momentum continues to build.
Still, confirmation is important. Until XAU/USD closes decisively above the neckline and clears the $4,590 resistance area, the pattern remains incomplete.
Support levels remain in focus
On the downside, the first support level sits near the session low of $4,530. A move below that level could suggest that the latest rally is losing momentum and may encourage short-term profit-taking.
Below $4,530, last week’s low near $4,450 remains a key level.
That area marked the base of the recent recovery and is likely to be watched closely by traders looking for signs of renewed selling pressure.
A deeper pullback could expose the March 23 low near $4,350. A break below that level would weaken the broader technical structure and challenge the bullish recovery scenario.
For now, however, gold is holding above its immediate support levels while testing the upper end of its short-term range.
Breakout depends on dollar and risk mood
Gold’s next move is likely to depend on whether the US dollar remains weak and whether the market continues to price in lower geopolitical risk.
A sustained risk-on move could reduce haven demand for bullion, particularly if US-Iran talks are seen as lowering the probability of further escalation.
But if the dollar stays near weekly lows, gold may retain enough support to challenge resistance.
The immediate technical range is clear. XAU/USD needs to break above $4,590 to confirm a stronger bullish move towards $4,640 and then $4,770.
Failure to clear that level may leave gold vulnerable to another pullback towards $4,530 and $4,450.
For now, gold remains firm, with dollar weakness keeping buyers in control as traders wait for confirmation of a broader breakout.
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