A temporary Israel-Hezbollah ceasefire reduces safe-haven flows into the USD, supporting XAU/USD near $4,500 despite lingering geopolitical risks.
Gold (XAU/USD) traded marginally higher in early Asian hours, stabilizing above the $4,500 level as a partial ceasefire between Israel and Hezbollah eased demand for the safe-haven US Dollar. The truce, brokered by US mediation, temporarily reduced fears of a wider regional conflict, though uncertainty persists over US-Iran negotiations and inflation pressures.
The yellow metal struggled to extend gains despite the USD’s muted reaction to the de-escalation. Mixed signals from Iran, which threatened to suspend talks following fresh strikes, and President Trump’s claims of ongoing negotiations kept markets cautious. Prior sessions saw gold retreat amid expectations of Federal Reserve rate hikes, limiting bullish momentum.
Investors remain on edge, awaiting clearer progress in US-Iran talks before committing to directional bets. The Strait of Hormuz’s status and potential extensions of the ceasefire could further influence USD and gold dynamics in the near term.