Gold Price Forecast: XAU/USD stays bullish as Iran war continues to spur safe-haven flows

Gold is finding renewed bids in Asian trades on Tuesday, making another attempt to regain the $5,400 level amid persistent demand for safe-haven assets as the Iran war extends.  

Gold cheers US-Iran geopolitical escalation

A softer risk tone remains in play as US President Donald Trump continues to threaten deeper escalation to the ongoing war with Iran, warning that a “big wave” is yet to come.

Trump vowed to respond to an attack on the US embassy in Riyadh and to the deaths of US military personnel during the Iran conflict.

Late Monday, a Saudi Defense Ministry spokesperson confirmed that the US Embassy in Riyadh was attacked with two Iranian drones.

US Secretary of State Marco Rubio said on Monday that the United States (US) is preparing for a “major uptick” in attacks in Iran over the next 24 hours. 

This came after Israel launched attacks on Beirut's southern suburbs on Monday. Hezbollah fired rockets and drones toward Israel in retaliation for the death of Iranian Supreme Leader Ali Khamenei.

Meanwhile, markets assess the impact of the closure of the Strait of Hormuz by Iran’s Islamic Revolutionary Guard Corps (IRGC) on oil prices, which could be positive for the inflation hedge, Gold.

However, sustained haven demand for the US Dollar (USD) remains a headwind for USD-sensitive Gold.

Additionally, markets are scaling back dovish US Federal Reserve (Fed) bets amid expectations of higher inflation, likely to be fuelled by surging oil prices, which could limit the Gold price upside.

Gold traders will continue to pay close attention to the geopolitical developments surrounding the Iran war for fresh trading impetus, as US economic data will likely play second fiddle until Friday’s release of the Nonfarm Payrolls report.

Gold price technical analysis: Daily chart

The near-term bias is bullish as price holds well above the 21-, 50-, 100- and 200-day Simple Moving Averages (SMAs), which all trend higher and signal entrenched upside control. The metal is consolidating above the 78.6% Fibonacci retracement at $5,341.96, measured from the $4,401.99 low to the $5,597.89 high, keeping the broader uptrend intact after recent volatility. The Relative Strength Index (RSI) at 64.75 remains above the 50 midline, indicating firm bullish momentum without yet entering overbought territory.

Immediate support emerges at the 78.6% retracement at $5,341.96, followed by the 61.8% retracement at $5,141.05, where prior reaction lows and the rising 50-day SMA cluster to reinforce the zone. A deeper pullback would expose the 50% retracement at $4,999.94, which aligns with the rising 21-day SMA and marks a pivotal level to preserve the prevailing uptrend. On the upside, initial resistance stands near the recent peak at $5,597.89; a daily close above this barrier would open the way toward new highs and extend the bullish phase.

(The technical analysis of this story was written with the help of an AI tool.)

This report was published on Monday, analysing Gold following Sunday's US-Israel attacks on Iran.

• Gold pares back gains after hitting the $5,400 barrier early Monday, following the US-Israel attacks on Iran.
• The US Dollar stays strongly bid on escalating geopolitical tensions in the Middle East.   
• Gold battles the 78.6% Fibo resistance at $5,342, while the daily RSI stays bullish.  

Gold is taking a breather after the initial run to over one-month highs near $5,400, kicking off the new week with a bang.

A global flight to safety theme, following the US-Israel joint attacks on Iran over the weekend, bolstered the demand for the traditional store of value, Gold.

Gold thrives on risk aversion and global uncertainty

Gold buyers resort to cashing in on their long positions, fuelling a modest retracement in the prices heading toward the European opening bells.

However, the bullish potential for Gold remains intact in the near-term amid continued geopolitical escalation in the Middle East.

The Times of Israel reported that the Israel Defence Force (IDF) struck Hezbollah targets in Beirut and across Lebanon in response to rocket fire.

Meanwhile, the UK Defense Ministry stated that British forces responded to a suspected drone strike at its military base in Cyprus.

Additionally, US President Donald Trump suggested the conflict could last for four more weeks, saying that attacks would continue until US objectives were met.

Gold also continues to draw support from surging Oil prices, caused by supply disruption fears, which could spike inflation and send the global economy into a tailspin once again. The bright metal is widely known as a hedge against inflation.

Several oil shipments were not permitted by Iran’s Islamic Revolutionary Guard Corps (IRGC) Navy to pass through the Strait of Hormuz.

“While Iran has yet to officially confirm that the vital waterway has been blocked, marine tracking sites showed tankers piling up on either side of the strait wary of attack or maybe unable to get insurance for the voyage,” according to the Guardian.

Looking ahead, all eyes remain on the Middle East tensions, while top-tier US economic data will also be awaited for fresh trading cues on Gold. However, geopolitical developments will continue to lead the sentiment.

US Defense Secretary Pete Hegseth is scheduled to hold a press conference at 13 GMT, according to the Defense Department on X.