Gold is back in the black: Geopolitics dictates conditions again

Gold, on Wednesday, returned above the key level of 5000 USD per ounce and has already approached 5067 USD. The precious metal continues to grow after jumping more than 6% in the previous session, marking the strongest daily increase since 2008. The quotes were supported by purchases following a decline after a sharp correction at the beginning of the week.

Geopolitical risks gave an additional impetus to the precious metal. After US forces shot down an Iranian drone near an aircraft carrier in the Arabian Sea, demand for defensive assets intensified. At the same time, President Donald Trump stated that diplomatic contacts continue, and the White House confirmed the US-Iran talks scheduled for Friday.

Expectations of rapid Fed rate cuts have eased somewhat since the nomination of Kevin Warsh to head the Fed. Nevertheless, the markets are still pricing in two rate cuts – probably in the middle of the year and later in 2026.

Separately, it is noted that the publication of key US labour market statistics, including JOLTS data and the monthly employment report, will be postponed due to the partial government shutdown. The House voted on Tuesday on the Senate-approved stopgap budget.

Technical analysis

On the H4 chart for gold, after completing a powerful uptrend and reaching a peak around 5600, the market entered a sharp correction. The decline was impulsive, as evidenced by the expansion of Bollinger Bands – a sign of panic selling. The minimum was noted in the 4440–4450 zone, from where the technical rebound began. Current prices are recovering but remain below the Bollinger median line. The structure is still corrective, with increased volatility and a predominance of downside risks.

On the H1 chart, after a landslide downward movement, a base and a sequence of higher minima have formed – local stabilisation. The price is trading in a narrow upward channel and gradually moving towards the 5050-5100 resistance zone. However, the recovery looks technical. As long as the quotes are below key resistance and the median line of the higher timeframe, the rebound remains vulnerable to a resumption of selling.

Conclusion

In summary, gold's sharp recovery is primarily a technical rebound from oversold conditions, supercharged by a sudden flare-up in geopolitical tensions. While the move is significant, the technical structure across timeframes suggests it remains a corrective bounce within a larger downtrend, not a confirmed reversal. The rally is vulnerable as long as prices trade below key higher-timeframe resistance. The fundamental landscape remains mixed, with delayed US data creating uncertainty and revised, but still present, Fed easing expectations providing a floor. Near-term direction will hinge on the evolution of Middle East diplomacy and gold's ability to breach critical technical ceilings.