Gold retreats sharply from two-week top/$4,800 as Trump’s Iran comments boost USD
- Gold attracts heavy selling on Thursday and snaps a four-day winning streak to a two-week high.
- Trump’s remarks dampen Iran de-escalation hopes and benefit the USD’s reserve currency status.
- Rallying Oil prices fuel inflation fears and bolster Fed rate hike bets, undermining the commodity.
Gold (XAU/USD) witnessed an intraday turnaround from the $4,800 mark, or a fresh two-week high set earlier this Thursday, and for now, seems to have snapped a four-day winning streak amid resurgent US Dollar (USD) demand. Addressing the nation, US President Donald Trump threatened that Iran would be hit extremely hard over the next two to three weeks and would be brought to the Stone Age if no deal is reached. This tempers de-escalation hopes and investors' appetite for riskier assets, bolstering the US Dollar's (USD) global reserve currency status and undermining the commodity.
Meanwhile, Trump added that Iranian energy infrastructure remains a possible target. Adding to this, the Wall Street Journal reported on Tuesday that the United Arab Emirates (UAE) is pushing for military action to reopen the Strait of Hormuz and is lobbying for a UN Security Council resolution to authorize such an operation. This, in turn, triggered a sharp rally in Crude Oil prices, reigniting inflationary concerns and reaffirming bets for a rate hike by the US Federal Reserve (Fed). The outlook lifts US Treasury bond yields, which further benefits the USD and weighs on the non-yielding Gold.
The precious metal falls around $150 from the Asian session peak, and the volatility is expected to remain elevated as investors continue to react to the incoming geopolitical headlines. Given that the Gold price remains highly sensitive to developments surrounding the ongoing conflict in the Middle East, the immediate reaction to the closely-watched US Nonfarm Payrolls (NFP) report on Friday is more likely to be limited. Nevertheless, the fundamental backdrop warrants some caution before positioning for an extension of the recent goodish rebound from the $4,100 mark, or a four-month low set last week.
XAU/USD 4-hour chart
Gold seems vulnerable after facing rejection near the 200-period EMA on H4, around $4,800
From a technical perspective, Thursday's failure near the 200-period Exponential Moving Average (EMA) support breakpoint, now turned resistance on the 4-hour chart, and the $4,800 mark favors the XAU/USD bears. Moreover, the Relative Strength Index (RSI) drops back toward the mid-50s from overbought territory above 70, while the Moving Average Convergence Divergence (MACD) indicator (MACD) pulls back from recent highs, suggesting fading upside pressure rather than an outright reversal at this stage.
Meanwhile, some follow-through selling could drag the Gold price to the next support at $4,600, where prior demand converged with the latest momentum cool-off. A loss of this level would open the way toward $4,550. On the upside, initial resistance emerges at the recent swing high near $4,787, with a break above exposing the $4,820–$4,830 band where the 200-period exponential moving average reinforces a tougher barrier.
(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.
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