Spot gold prices retreated significantly from their intraday highs on Thursday, ultimately closing flat. Optimistic remarks from US President Donald Trump regarding a potential US-Iran peace agreement dampened safe-haven demand. Markets are awaiting further developments from the US-Iran talks.

During the Asian trading session on Thursday, gold reached an intraday high of $4,838.41 per ounce before beginning a sustained decline. The sell-off accelerated during the New York trading hours, with the price dropping to a low of $4,772.95 per ounce before staging a slight recovery. By the close of trading on Thursday, spot gold was quoted at $4,790.45 per ounce, erasing all its daily gains to end the session unchanged.

FXStreet analyst Christian Borjon Valencia noted that gold prices moved lower during the US trading session. He attributed this to a reduction in safe-haven appetite, fueled by progress in consultations to restore US-Iran negotiations and a general easing of geopolitical tensions. This was particularly influenced by US President Trump's mediation in a potential ceasefire agreement between Israel and Lebanon.

President Trump stated that the war involving the US, Israel, and Iran is "nearing its end." The White House also expressed optimism about reaching a deal and revealed that further in-person talks might be held in Pakistan. Valencia also mentioned that gold faced pressure from a rebounding US dollar. The ICE US Dollar Index (DXY), which tracks the dollar against a basket of six major currencies, rose 0.21% to 98.21.

Reports of a potential agreement between Washington and Tehran were well-received on Wall Street, with all three major US stock indices recording gains. Elias Haddad, Global Market Strategist at Brown Brothers Harriman in London, commented, "The dollar saw a relief rally, and the cyclical backdrop remains neutral for the coming months. Expectations of a diplomatic resolution to the US-Iran conflict continue to support the recovery of risk sentiment in financial markets." Haddad added that any gains for the dollar, a traditional safe-haven asset, might be limited.

President Trump, speaking to reporters on the South Lawn of the White House, suggested another round of face-to-face talks with Iran could occur this weekend. He stated that if a peace agreement is reached, he would consider traveling to Pakistan to sign it. Trump expressed hope that a permanent ceasefire peace deal could be achieved before the expiration of the current two-week temporary truce, eliminating the need for an extension. "We are very close to an agreement," Trump said, adding that he would announce it swiftly if finalized. He claimed the peace deal would bring "free oil and the Strait of Hormuz" to the US. Earlier on Thursday, Trump posted on Truth Social that Israeli and Lebanese leaders had agreed to a 10-day ceasefire starting at 5 PM ET.

Regarding the Federal Reserve's interest rate outlook, FXStreet's Valencia pointed out that de-escalation in the Middle East conflict, within the current macroeconomic context, reduces gold's appeal as a safe-haven asset. However, a potential decline in crude oil prices could help ease inflationary pressures. If disinflationary trends re-emerge, it would provide justification for the Fed to implement further easing measures. Consequently, a low-interest-rate environment could open the door for further gains in precious metals prices. David Meger, Director of Metal Trading at High Ridge Futures, said, "If US-Iran tensions ease or the war ends, the likelihood of future Fed rate cuts becomes greater, which could support the precious metals market." Traders currently price in a 32% probability of a Fed rate cut this year.

The US Labor Department reported on Thursday that initial jobless claims fell last week, indicating stable labor market conditions. This suggests employers remain cautious about hiring despite the economic uncertainties posed by the Iran conflict. Gold prices declined in March following the US and Israel's military actions against Iran, as investors grew concerned about rising inflation and market liquidity. Gold, which does not yield interest, typically becomes less attractive when interest rates are high.

Analyzing gold's price action, Valencia suggested that the metal is consolidating within a specific range. On the upside, the 50-day Simple Moving Average (SMA) at $4,896 per ounce presents the first key resistance level on the path toward the $5,000 mark. On the downside, initial support is at the psychologically important $4,700 level, followed by the 100-day SMA at $4,691 per ounce. Valencia noted that the Relative Strength Index (RSI) still suggests a positive outlook for gold, but the indicator has flattened, indicating a market in wait-and-see mode without a clear directional bias.

Valencia concluded that a successful break above $4,900 per ounce would make the $4,950 area the next target, followed by the $5,000 milestone. Conversely, if selling pressure pushes the price below the 100-day SMA at $4,691, a further decline toward $4,650 is anticipated, potentially testing the 20-day SMA at $4,638. Below that level lies the key $4,600 integer handle.