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Gold Price Forecast: XAU/USD declines sharply to near $4,400 as Middle East fears revive

  • Gold price faces selling pressure as Iran’s disagreement with Trump’s ceasefire plan revives Middle East risks.
  • Iran’s Araghchi said that Tehran doesn’t intend to negotiate with the US.
  • Tehran wants the US to shut down its bases in the Middle East and allow for pursuing the missile program.

Gold price (XAU/USD) is down 2% to near $4,410 during the European trading session on Thursday.

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The precious metal has come under pressure after a strong recovery in the last three trading days, as fears of persistent war in the Middle East have revived, following Iran’s rejection to United States (US) President Donald Trump’s month-long ceasefire proposal and 15-point settlement plan.

Theoretically, heightened geopolitical tensions boost demand for safe-haven assets, such as Gold.

However, the precious metal faces backlash amid fears that persistent Middle East conflicts would keep oil prices higher, which already have prompted inflation expectations, a scenario that restricts global central banks from easing monetary conditions and diminishes the demand for non-yielding assets, such as Gold.

Iran’s foreign minister Abbas Araghchi said on Wednesday that the country is reviewing a US proposal to end the war in the Gulf but has no intention of holding talks to end the widening Middle East conflict, per Reuters.

Also, a senior Iranian official told Al Jazeera that the proposal is “extremely maximalist and unreasonable”.

In the 15-point proposal, the US demanded Iran’s restriction to building nuclear weapons, and no uranium enrichment on Iranian territory.

Meanwhile, Iran has also put forward conditions for ending the war, which include the closure of all US bases in the Gulf, compensation for attacks on Tehran's infrastructure, lifting all sanctions, and allowing Iran to retain its missile program without restrictions.

Gold technical analysis

XAU/USD trades lower to near $4,410 as of writing. The near-term bias is mildly bearish as price slides away from recent highs while remaining slightly above the rising 200-day Exponential Moving Average (EMA) near $4,223, which still anchors a broader uptrend.

The 14-day Relative Strength Index (RSI) oscillates inside the 20.00-40.00 zone, signaling persistent selling pressure.

Initial support emerges at the $4,400 area, with a daily close below exposing deeper weakness toward the 200-day EMA at $4,223 and then the March 23 low around $4,100.

On the upside, the March 25 high of $4,602.48 marks the first meaningful resistance, followed by the February 17 low of $4,842.06, which was the prior support level. A decisive break above the latter would ease the immediate bearish tone and reopen the path toward the $5,000 region.

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

(This story was corrected at 11:30 GMT to say in the second paragraph that it is a scenario that restricts global central banks from easing monetary conditions and diminishes the demand for non-yielding assets, not improves the demand for Gold.)

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.

Author

Sagar Dua

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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