Gold Testing Key Support As USD Breaks Out
USD Rally Hurts Gold
Gold prices are coming back under heavy selling pressure this week with the futures market now testing last week’s YTD lows. The move comes amidst a fresh push higher in USD which is being bolstered by hawkish Fed expectations and renewed safe-haven demand as Trump threatens Iran over the Strait of Hormuz. While gold typically benefits during periods of geopolitical uncertainty, the strength of USD during the Iran war has altered this dynamic with the greenback the preferred safe-haven play. Despite signing an initial peace framework deal last week, the US and Iran have been threatening each other once again this week with Iran re-closing the Strait of Hormuz just days after reopening it.
US Waives Iran Sanctions
However, there are some reasons to be optimistic. US and Iranian delegates have begun talks in Switzerland today, aimed at delivering a full peace deal on the back of the current 60-day negotiations window. Additionally, Trump has signed off on sanctions waivers for Iran which should unlock around $12 billion in frozen assets while also allowing Iran access to the wider oil market again, a major revenue boost for the country. The hope is that this gesture will see Iran reciprocate by reopening the Strait of Hormuz. If seen, this could curb investor uncertainty, leading USD lower and allowing gold prices to rebound. However, if tensions remain elevated and Iran refuses to reopen the Strait gold prices could fall sharply as USD continues higher.
Technical Views
Gold
The market is now once again testing the support zone around the 4,092.60 lows and the bull trend line from 2025 lows. If broken, focus turns to deeper support at 3,898.03 next, in line with bearish momentum studies readings. Above, 4,389.24 remains the key level for bulls to get back above in order to alleviate downside risks.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.