TradingKey - As of the Asian session on July 21, gold prices ( XAUUSD) staged a rapid intraday rebound, rising 1.56% on the day to touch a high of $4,084.28. From a technical perspective, gold prices have recently been consolidating near the $4,000 level, and began to rebound today driven by expectations of cooling US-Iran tensions.

U.S.-Iran Situation Shows Signs of Diplomatic Easing, Gold Prices Rebound Higher

From a fundamental perspective, the core factor influencing gold price movements today lies in rising market expectations for diplomatic communication between the U.S. and Iran. Previously, the conflict between the U.S. and Iran around the Strait of Hormuz had continued to escalate, sending international oil prices surging at one point, with the market worrying that rising energy prices would push U.S. inflation back up and force the Federal Reserve to maintain high interest rates for a longer period.

However, the latest news indicates renewed signs of diplomatic easing between the U.S. and Iran. The market has noted that the relevant parties are pushing for a 10-day ceasefire arrangement to restart the previous interim agreement framework. Consequently, investors' concerns over a continued surge in oil prices have eased, driving gold prices to rebound by over 1% today. For gold, the improvement in U.S.-Iran diplomatic expectations means that by dampening oil prices and inflation concerns, it alleviates the pressure on the Fed to further raise interest rates, thereby improving the interest rate environment for gold.

It is worth noting that the U.S.-Iran tensions have not truly been resolved. According to AP reports, the U.S. and Iran remain in a continuous standoff over control of the Strait of Hormuz, mutual trust is extremely low, and the effectiveness of intensive U.S. airstrikes is also limited. Although the diplomatic window has reopened, Iran maintains a tough stance, and regional conflicts have not entered a stage of stable de-escalation. Meanwhile, threats of maritime blockades by Yemen's Houthi rebels could still further disrupt Middle East shipping, making it difficult for risks in the Strait of Hormuz and surrounding waters to fade quickly. This means that uncertainty in the Middle East is still capping the upside potential for gold prices.

Gold Price Technical Analysis: Gold Price Hits $4,000, Will Gold Price Still Fall?

Gold price daily chart, Source: TradingView

Looking at the daily gold chart, the price confirmed a break below $4,000 on July 16, skewing overall market sentiment to the bearish side. However, as gold prices recently climbed back above $4,000, it indicates some recovery in market sentiment and a strengthening of short-term bullish momentum. This also suggests that strong dip-buying interest remains below $4,000 and that the market has not entered a one-way downward trend.

At present, gold prices briefly rebounded above $4,070 intraday today, but attention should be paid to whether today's closing price can hold firmly above $4,070. If it holds, room for a further rebound in gold prices will open up, with the next target expected to test the $4,200 mark. If this level is further breached, gold prices could rise to test the resistance level at $4,360.

Conversely, if today's closing price falls below $4,070, gold prices will continue their recent range-bound consolidation in the short term, testing the $4,000 mark on the downside. Further down lies the support level at $3,960, and a continued decline could see the price test the $3,900 threshold.

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