XAU/USD extends bullish run above $4,400; will it last?

• Gold is at its highest level in two months, well beyond the $4,400 level early Tuesday.
• The US Dollar recovery stalls amid receding Fed rate hike bets, despite US-Iran impasse.
• Gold looks to $4,500 and US CPI data as the daily RSI is still not overbought.

Gold is holding firm above $4,400 in Asia on Tuesday, extending its bullish run into a third consecutive day. Traders now look forward to Wednesday’s US Consumer Price Index (CPI) release for the next major move.

All that’s glittering so far this week is Gold, and rightly so, as bulls continue to cheer fading expectations for a US Federal Reserve (Fed) interest rate hike in September.

The odds of such a move now remain at a coin-toss level, per CME Group’s FedWatch Tool, in the aftermath of the unexpected 23,000-job decline in Nonfarm Payrolls in July.

This narrative has weighed heavily on the US Dollar (USD) across the board, supporting bullion. That was accompanied by optimism over the reopening of the Strait of Hormuz and easing Oil prices and inflation concerns.

However, the overnight surge in Oil prices restokes inflationary fears, particularly after negotiations between the United States (US) and Iran over a peace deal and the reopening of the Strait of Hormuz hit an impasse.

“In a post on Truth Social on Monday, US President Donald Trump said he was issuing the demand for war reparations in response to Iranian negotiators making similar claims for damages for the five-month war that has killed thousands and devastated Iran’s military and economy,” per The Guardian.

In an additional setback to the diplomatic efforts, Iranian outlets and a X post by an adviser to Parliament Speaker Mohammad Bagher Ghalibaf reported that Tehran will wait until the US President’s term ends on January 20, 2029, to resume talks.

The renewed pessimism around the Mideast conflict has fuelled risk aversion across Asia, sending Oil prices and US Treasury bond yields higher.

Against this backdrop, it remains to be seen if Gold sustains the ongoing uptrend. The bright metal also risks a corrective decline on likely profit-taking, as traders could opt for repositioning ahead of the critical US inflation report due on Wednesday.

In the daily chart, XAU/USD trades at $4,427.44. The metal holds a bullish near-term tone as spot price trades above the 21-day, 50-day and 100-day simple moving averages (SMAs), with the latter now offering nearby trend support around $4,389.72. The 200-day SMA at $4,498.91 remains the primary overhead barrier, capping further upside for now. The Relative Strength Index (14) at 69.22 flirts with overbought territory, suggesting buying pressure is strong but vulnerable to consolidation if momentum cools.

On the topside, immediate resistance is defined by the 200-day SMA at $4,498.91, and a daily close above this level would open the door to a stronger bullish extension. On the downside, initial support is seen at the 100-day SMA near $4,389.72, followed by the 50-day SMA at $4,149.71 and the 21-day SMA at $4,120.24, which collectively form a broad underlying demand zone on any deeper pullbacks.