Gold rises for fifth day on Middle East tensions, modest USD pullback
- Gold attracts buyers for the fifth straight day amid rising tensions in the Middle East.
- A modest USD pullback from a multi-month peak further lends support to the commodity.
- The overnight failure to find acceptance above $5,400 warrants caution for the XAU/USD bulls.
Gold (XAU/USD) catches fresh bids following the previous day's two-way price swings and trades with modest gains above the $5,350 level, during the Asian session on Tuesday. Concerns about a broader regional conflict in the Middle East continue to weigh on investors' sentiment and underpin demand for the traditional safe-haven bullion.
Iran's Revolutionary Guard Corps (IRGC) Navy effectively declared the closure of the Strait of Hormuz and announced that no vessels are permitted to cross the critical maritime chokepoint. Moreover, Iran continues to fire missiles and drones at several Persian Gulf countries. A drone strike that hit the US Embassy in Saudi Arabia’s capital, Riyadh, marked a further escalation of the conflict.
Meanwhile, US Secretary of State Marco Rubio stated that the US is preparing for a major uptick in attacks in Iran over the next 24 hours. This comes after US President Donald Trump said that a big wave is yet to come, underscoring the risk of a prolonged war. Moreover, the State Department urged US citizens to depart immediately from countries in the Middle East due to serious safety risks.
Apart from this, a modest US Dollar (USD) pullback from its highest level since January 20, touched on Monday, supports the Gold price. That said, rising geopolitical tensions might continue to underpin the USD's status as the global reserve currency. Moreover, reduced bets for aggressive policy easing by the Federal Reserve (Fed) should limit USD losses and cap the non-yielding yellow metal.
Nevertheless, the XAU/USD pair sticks to positive bias for the fifth straight day, though it remains below the $5,400 mark and its highest level since late January, set on Monday. In the absence of any relevant US macro data, the market focus will remain glued to developments surrounding the Iran war. The price action, however, warrants caution before positioning for a further appreciating move.
XAU/USD 1-hour chart
Gold seems poised to climb further as last week’s breakout above $5,200 remains in play
Last week's breakout above the $5,200 horizontal barrier was seen as a key trigger for the XAU/USD bulls. Moreover, the Gold price holds well above the rising 100-period Simple Moving Average (SMA), keeping the broader uptrend intact despite the recent volatility.
Meanwhile, the Relative Strength Index (RSI) around 59 stays above the midline without reaching overbought conditions, reinforcing a modest upside skew rather than an extended rally. Furthermore, the Moving Average Convergence Divergence (MACD) line remains below the signal line and in positive territory, with the negative histogram shrinking, which suggests fading downside momentum within a still-upward structure.
Hence, a subsequent move up could face initial resistance at the recent high around $5,390, followed by a more significant barrier at $5,410, where prior rejection coincided with stretched intraday momentum. A sustained move above $5,410 would open the way toward the $5,450 region, while failure to clear $5,390 would keep the metal consolidating within the current intraday range.
On the flip side, immediate support emerges at $5,340, with a break exposing the next downside level at $5,320, ahead of stronger backing from the 100-period SMA near $5,230. A deeper pullback would target $5,300 as an intermediate floor.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
추천 기사
