Gold prices have returned to $3,400 following reports of Iran's willingness to continue talks with the US regarding its nuclear program. The precious metal is supported by its safe-haven appeal and the weakness of the US Dollar (USD).

Global leaders are gathering in Canada to discuss ongoing conflicts and risks that could impact gold prices ahead of the Fed decision on Wednesday. At present, XAU/USD is hovering around $3,400, acting as both support and resistance throughout the day.

Iran's recent signals indicating a desire to end hostilities and resume talks over its nuclear program have helped ease geopolitical tensions. This has reduced safe-haven demand for gold and alleviated upward pressure on oil prices, suggesting a potential step towards de-escalation.

The metal's safe-haven appeal, along with fluctuations in US 10-year Treasury yields, remains a key price driver. Profit-taking at elevated levels has limited further gains, while ongoing geopolitical tensions, particularly between Israel and Iran, continue to support demand.

Despite a minor pullback, gold remains elevated due to safe-haven flows from Middle East tensions and expectations for a Fed rate cut. Analysts see current levels as a buying opportunity, although volatility may persist until major policy clarity emerges.

Daily Digest Market Movers: Gold Supported by Israel-Iran Conflict

US President Trump's mixed signals on Israel and Iran have kept the risk premium elevated, with ongoing conflicts leading to profit-taking by traders. Israel's "Operation Rising Lion" targeting Iranian military and nuclear sites has resulted in casualties on both sides.

The US will hold a 20-year Bond Auction to test the bond market amid concerns about debt sustainability. Higher bond yields can attract investment into the US Dollar, potentially impacting gold prices.

The upcoming Federal Reserve interest rate decision will be closely watched, with expectations for rates to remain unchanged. The Fed meeting will provide insight into economic risks and factors influencing the US outlook.

Gold Technical Analysis: XAU/USD Around $3,400

Gold prices are weakening slightly, erasing part of last week's rally. The 4-hour chart shows support at the $3,400 level, with resistance at $3,439 and $3,446. A break above could lead to a retest of the $3,500 record high.

On the downside, initial support lies at the 20-period SMA, with further support at $3,372 and $3,363. The RSI indicator suggests a slight bullish bias that is losing momentum.

US Dollar FAQs

What is the US Dollar?
The USD is the official currency of the US and is widely traded globally. It replaced the British Pound as the world's reserve currency after WWII and was backed by Gold until 1971.

How do Fed decisions impact the USD?
The Fed's monetary policy decisions, primarily interest rate adjustments, influence the USD value. Rate hikes strengthen the USD, while rate cuts can weaken it.

What is Quantitative Easing?
QE is a policy used by the Fed to increase credit flow in a financial system. It involves buying government bonds to inject liquidity, usually leading to a weaker USD.

What is Quantitative Tightening?
QT is the opposite of QE, where the Fed stops buying bonds and can lead to a stronger USD.