Gold (XAUUSD) Price Forecast: Ceasefire Fuels Gold Rally Toward 50-Day Moving Average

Gold Jumps to Three-Week High as Iran Ceasefire Eases Immediate Escalation Risk

Spot Gold (XAUUSD) is trading sharply higher early Wednesday after jumping to the strong side of a major 50% level at $4744.34. This level is new support. Along with this move, the market took out last week’s high at $4800.80, shifting momentum to the upside.

Technical Outlook

The long-term range is $5602.23 to $4099.12. The market is currently trading on the strong side of its 50% to 61.8% retracement zone at $4744.34 to $4541.88.

The intermediate range is $5419.66 to $4099.12. Its retracement zone at $4850.68 to $5028.04 is the next upside target. Trader reaction to this area should determine the market’s next major move. A breakout over $5028.04 will put the tops at $5419.66 and $5602.23 back on the radar.

The inability to overtake $5028.04 and sustain a rally over $4850.68 will signal the presence of sellers. This could shift momentum back to the downside, which could lead to a retest of the $4744.34 to $4541.88 and even threaten to cross into bear market territory under $4481.78.

If the swing chart is too much to follow, then keep your focus on the 200-day and 50-day moving averages at $4160.32 and $4930.69, respectively. We already know that the 200-day MA is strong since it stopped the selling at $4099.12 on March 23. We also know how important the 50-day MA is because when it failed on March 18, it triggered a $875.16 break in four trading sessions.

With the market pulling away from the long-term 200-day MA support, the focus should be on trader reaction to the next test of the 50-day moving average. Ironically, it falls inside the retracement zone that is likely to determine the next major move.

So if you are trading the XAUUSD daily chart then watch the price action and read the order flow on a test of $4850.68 to $5028.04 and the 50-day moving average at $4930.69 inside this zone.

Ceasefire Pause Catches Traders Off Guard, Gold Responds

Nobody was positioned for a pause. Trump’s decision to suspend attacks for two weeks hit the market cold and gold moved fast. The relief trade kicked in immediately. Early signals of potential negotiations added fuel and by the time traders caught up, gold was already pushing to a three-week high.

The inflation angle didn’t go away though. If this ceasefire falls apart and energy prices surge again, gold gets another reason to run. Talks are scheduled to begin April 10 and until there’s something concrete coming out of those discussions, uncertainty stays in the market.

Two Weeks Buys Time But the Real Question Comes After

Gold is still down over 8% since late February. There’s room to recover if the sentiment shift holds. The 50-day moving average at $4930.69 is the level I’m watching. Bulls need to push through it and hold it. If they can do that, this rally has legs.

The two weeks is the easy part. What happens when the clock runs out is the question nobody can answer right now. That’s what gold traders should be thinking about.

More Information in our Economic Calendar.