Gold prices steadied as renewed hopes for a diplomatic breakthrough between the United States and Iran averted a deeper slide, with traders now watching for a response to Tehran's latest proposal.

Fundamental Overview

Gold came back under pressure after President Trump tempered expectations of an earlier end to the Iran war, repeating that the United States would make a deal with Tehran after the November elections. Oil prices, Treasury yields and the US dollar began to rise again following his remarks, weighing on the metal.

The losses then extended on Wednesday after US purchasing managers' index (PMI) data came in much stronger than expected, lifting bets on further Federal Reserve rate hikes and sending real yields higher. Real yields matter for gold because the metal pays no interest, so rising yields increase the opportunity cost of holding it — the dynamic behind the metal's sensitivity to shifts in rate expectations.

Attention has now turned to renewed hopes for a deal and the reopening of the Strait of Hormuz, following news that Iran has put an offer on the table, promising to reopen the strait within seven days if the States meets its terms. Iranian Foreign Minister Araghchi is staying in New York over the weekend to await a US response. The strait's role as a critical artery for global oil shipments is why its status moves energy prices, which in turn feed into the broader financial conditions that gold trades against.

A breakthrough would be positive for gold, as aggressive-hike bets would likely be pared back and lead to a fall in real yields. A prolonged stalemate, or even a re-escalation, would on the other hand likely continue to pressure the precious metal through tightening financial conditions.

Gold Technical Analysis: Daily Timeframe

On the daily chart, gold (CFD contract) is trading below the key support zone around the 4,300 level. Sellers are expected to continue stepping in around these levels, with a defined risk above the zone, to keep targeting the 3,885 level. Buyers, on the other hand, will want to see the price rise back above the support zone to position for a rally into the 4,700 level, with 4,510 as the first target.

Gold Technical Analysis: 4-Hour Timeframe

On the 4-hour chart, a minor downward trendline defines the bearish structure. If the price pulls back into the trendline, sellers are expected to lean on it, with a defined risk above it, to position for a break below the support and new lows. Buyers, meanwhile, will want to see the price break higher to increase bullish bets toward the 4,510 level next.

Gold Technical Analysis: 1-Hour Timeframe

On the 1-hour chart, sellers will continue to look for short opportunities around the broken support or the downward trendline, while buyers will want to see upside breaks to start targeting new highs. The red lines on the chart define the average daily range for today.

Upcoming Catalysts

There is nothing on the economic calendar today, but traders will keep a close eye on US-Iran developments following yesterday's proposal to reopen the Strait of Hormuz under certain conditions. The seven-day window attached to the offer gives markets a concrete timeframe against which to judge any follow-through.