Gold Rises as Geopolitical Risk Premium Fades

Gold prices rose more than 4% on Wednesday, approaching 4,690 USD per ounce amid signs of easing tensions in the Middle East. Expectations of de-escalation could lead to lower oil prices and reduced concerns about further tightening of central bank policy.

Donald Trump stated he was ready to end the conflict with Iran even with the Strait of Hormuz partially closed. Separately, reports emerged that Iranian President Masoud Pezeshkian may consider ending the conflict under certain conditions.

However, the rise in gold remains constrained. Reducing geopolitical risks diminishes demand for safe-haven assets, while a strong dollar and elevated government bond yields continue to pressure the metal.

In March, gold lost more than 13%-its steepest monthly decline since October 2008. The precious metal now remains approximately 19% below its January highs. Going forward, its dynamics will depend on US macroeconomic data and Federal Reserve signals on interest rates.

Technical Analysis

On the H4 XAU/USD chart, the market is forming a consolidation range around the 4,656 USD level. An upside breakout would open potential for a correction to 4,848 USD. A downside breakout could see the beginning of a downward wave to 4,750 USD. The MACD indicator confirms the current momentum, with its signal line above the centre line and pointing strictly upwards.

On the H1 chart, the market has broken above the 4,682 USD level and is forming a wave towards 4,855 USD. Looking ahead, a corrective move back to 4,490 USD will be considered, followed by an expected rise to 4,900 USD. The Stochastic oscillator supports this scenario, with its signal line remaining above the 20 level and showing upward pressure towards 80.

Conclusion

Gold's sharp rally reflects growing market optimism over a potential de-escalation in the Middle East, with signals from both US and Iranian leadership suggesting a possible path toward ending the conflict. However, the metal's upside remains capped by the corresponding decline in safe-haven demand, alongside persistent headwinds from a strong dollar and high bond yields. Having suffered its worst monthly loss since 2008 in March, gold now faces a pivotal moment where further gains will likely depend on whether easing geopolitical tensions translate into a sustained shift in central bank policy expectations. Technical indicators point to near-term upside, though the broader trend remains fragile.

By RoboForex Analytical Department

Disclaimer:

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.