prices continued to strengthen in recent sessions as both the U.S. Dollar Index () and the came under renewed pressure. The decline in these two key market drivers helped bullion break above the 4,120 resistance area after multiple failed attempts since the July 23 selloff.
A more positive outlook for the Japanese yen has been one of the primary factors weighing on the U.S. dollar over the past few days. At the same time, the pullback in Treasury yields has improved the attractiveness of non-yielding assets such as gold, providing additional support for the precious metal.
From a fundamental perspective, market sentiment was also supported by reports suggesting progress in diplomatic discussions between the United States and Iran. According to recent reports, both sides are moving closer to a potential agreement regarding the reopening of the Strait of Hormuz, a strategic global energy corridor that remains closely monitored by financial markets.
Nevertheless, investors remain cautious. Previous claims by U.S. President Donald Trump regarding negotiations and potential agreements with Iran have often been met with denials from Tehran. As a result, market participants are waiting for clearer confirmation before fully repricing geopolitical risks in the region.
Technical Analysis
U.S. 10-Year Treasury Yield (Daily)
The U.S. 10-Year Treasury Yield remains in a broader bullish structure, having established a series of higher highs and higher lows since early July. However, short-term momentum has weakened after yields failed to sustain gains near the 4.75% area.
The latest daily close below the 20-day Simple Moving Average (SMA 20) suggests that a deeper short-term correction may be underway. The nearest downside target is located around the 0.50 Fibonacci retracement level, which also coincides with the 50-day Simple Moving Average (SMA 50), acting as dynamic support.
As long as this support zone remains intact, the broader bullish structure remains valid despite the current pullback.
US Dollar Index (DXY) – Daily
The recent weakness in the U.S. dollar began earlier than the decline in Treasury yields, largely driven by improving sentiment toward the Japanese yen. This pressure pushed the DXY below both its SMA 20 and SMA 50, signaling a deterioration in short-term bullish momentum.
However, the broader market structure remains constructive while price continues to hold above the protected low at 97.631. Therefore, the current decline can still be viewed as a corrective move within a larger bullish trend.
Should selling pressure persist, the next downside targets are located within the Fibonacci 0.618–0.786 retracement zone, which may serve as a key discount area for potential buyers.
Gold (XAU/USD) – Daily
On the daily timeframe, gold continues to show signs of structural improvement after successfully maintaining a close above the SMA 20. The current rally has brought prices toward the SMA 50, which is acting as a significant dynamic resistance level.
A confirmed daily close above the SMA 50 would strengthen the bullish case and potentially signal a shift in medium-term momentum. Such a development could open the door for further upside in the sessions ahead.
The combination of a weaker U.S. dollar and declining Treasury yields remains a supportive backdrop for gold prices.
Gold () – 4-Hour
On the 4-hour timeframe, gold has been consolidating within a symmetrical triangle pattern over the past several weeks, reflecting a period of market indecision before a potential directional move.
Price has now broken above the triangle’s descending resistance line, suggesting that bullish momentum is beginning to build. As long as gold remains above the breakout area, the probability of further upside remains favorable.
The next upside objectives are located around the Fibonacci 0.618 and 0.786 retracement levels, which represent the nearest premium zones for the current recovery.
Conclusion
Gold has regained bullish momentum as declining U.S. Treasury yields and a weaker U.S. dollar reduce the opportunity cost of holding non-yielding assets. Additional support comes from improving sentiment surrounding U.S.-Iran diplomatic developments, although investors remain cautious given the mixed messaging from both sides.
Technically, gold is showing encouraging signs across multiple timeframes. A sustained move above the daily SMA 50, combined with the confirmed breakout from the 4-hour symmetrical triangle pattern, could pave the way for further gains in the near term.
Going forward, traders should closely monitor developments surrounding U.S.-Iran negotiations, as well as the direction of Treasury yields and the U.S. dollar. Continued weakness in both markets would likely provide additional support for gold’s recovery.
Disclaimer: This analysis is intended for informational and educational purposes only and should not be considered investment advice. Trading forex, commodities, and CFDs involves significant risk and may not be suitable for all investors. Always conduct your own research and manage risk appropriately before making any trading decisions.
