Gold steadies near $4,700 as lower US yields offset Iran risks
- Gold finds support from softer Treasury yields after Tuesday’s steep decline.
- Ongoing Hormuz tensions keep haven demand alive, but upside remains limited.
- High Oil prices and firm Fed expectations continue to pressure bullion.
Gold (XAU/USD) price holds steady on Wednesday, staging a slight recovery following Tuesday’s over 2% drop, as the resolution of the conflict in the Middle East remains uncertain, while falling US Treasury yields boosted the precious metal’s appeal. The XAU/USD pair trades at $4,726 after reaching a daily high of $4,772.
Bullion stabilizes after sharp drop as Fed hold bets cap gains
The market’s narrative has not changed, as US-Iran talks halted, spurred by the US blockade of Iran-flagged vessels. Consequently, Tehran is escalating the conflict as the Islamic Revolutionary Guard Corps (IRGC) seized three cargo ships in the Strait of Hormuz, demanding the lifting of the US blockade. US President Donald Trump extended the ceasefire as he waits for Tehran’s proposal, noting fractures within Iran’s leadership.
Bullion prices recovered as US Treasury yields edged lower. However, as the US 10-year Treasury yield pared losses at 4.298%, XAU/USD erased its previous gains.
High Oil prices are the main reason Gold has been unable to sustain its advance, as inflationary pressures build, increasing the chances the Fed will hold rates higher for longer.
Money markets are pricing in that the Fed will keep rates unchanged in 2026, with speculators expecting the first cut in July 2027, according to Prime Terminal data.
Fed implied forward rates
Data from the US showed that the economy remains solid, as Retail Sales revealed that households are continuing to spend, though the jump is mostly attributable to high gas prices. Nevertheless, the Atlanta Fed’s GDP Now, which estimates the Gross Domestic Product (GDP) in real time using the latest incoming data, projects the economy will rise by 1.2% in Q1 2026.
Federal Reserve (Fed) Chair nominee Kevin Warsh told the Senate he supports a new approach at the Fed, does not back forward guidance, and considers central bank independence essential. He stated President Trump has not pressured him on rate decisions.
In the meantime, the Greenback is recovering some ground as the US Dollar Index (DXY), which measures the buck’s value against six currencies, is up 0.17% at 98.57, reaching a seven-day high.
Ahead of the US economic docket, jobless claims and S&P Global Flash PMIs for April will be released on Thursday.
XAU/USD technical outlook: Bears stepped in, eyeing a break beneath $4,700
Gold price remains steady, unable to clear $4,800, which has exacerbated its fall beneath the psychological $4,750 level and poised it to challenge the 100-day Simple Moving Average (SMA) at $4,718.
Worth noting that since reaching a monthly high of $4,890, the yellow metal has printed a successive series of lower highs and lower lows over the last three days. Therefore, sentiment shifted from neutral to neutral-bearish, with sellers eyeing a clear breach of the 100- and 20-day SMAs, the latter of which is beneath the $4,700 threshold at $4,692.
Below this area, the next key support would be the $4,600 figure.
For a bullish resumption, Gold must reclaim $4,800 if buyers would like to remain hopeful of reaching higher prices, with the 50-day SMA as the next key resistance at $4,883.
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.
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