Gold Recovery Stalls Amid Middle East Escalation Risks and Bearish Signals
Gold prices remained defensive around the $4,500 level on Thursday morning after facing strong rejection near $4,600 in the previous session. The US Dollar continued to hold firm as fears of escalating tensions in the Middle East intensified, overshadowing fading hopes for a ceasefire.
From a technical perspective, gold appears vulnerable as the Relative Strength Index (RSI) remains below the neutral 50 level, while a confirmed Bear Cross continues to reinforce downside pressure.
In the short term, the bias has turned slightly bearish after spot prices slipped below the 21-day Simple Moving Average (SMA) near $4,940 and the 50-day SMA around $4,965. This shift signals growing seller control, although prices still trade above the rising 100-day and 200-day SMAs, clustered between $4,620 and $4,110. This structure suggests a correction within a broader uptrend, rather than a full trend reversal.
Momentum indicators further support the bearish outlook. The RSI currently sits at 33, hovering near oversold territory, indicating sustained selling pressure. Additionally, the 21-day SMA crossing below the 50-day SMA on Wednesday confirms the Bear Cross, strengthening bearish sentiment.
On the upside, initial resistance is seen at the 21-day SMA near $4,940, followed by the 50-day SMA at $4,965. A sustained breakout above this zone could ease immediate bearish pressure and open the path toward $5,100, where the latest swing high forms a stronger barrier.
On the downside, immediate support lies around $4,450, ahead of the rising 100-day SMA near $4,625, a key level maintaining the broader bullish structure. A decisive break below this level could expose the $4,300 zone, with further downside potentially testing the 200-day SMA near $4,115, where buying interest may re-emerge.
Geopolitical uncertainty remains a key driver. Confusion surrounding potential ceasefire negotiations and the risk of further escalation in the Middle East have revived risk-off sentiment across global markets. This dynamic is supporting demand for the US Dollar as a safe-haven asset, at the expense of gold.
Donald Trump continues to assert that peace negotiations with Iran are ongoing, while Iranian officials deny such talks. Meanwhile, Abbas Araghchi stated that the US proposal has been reviewed by senior authorities, but Iran has no intention to negotiate at this stage.
Instead, Iran has reportedly introduced a five-point plan, including a ceasefire, guarantees against future conflict, compensation, and control over the strategically vital Strait of Hormuz, according to The Guardian.
However, markets interpret the ongoing “peace narrative” as a potential delay tactic by Donald Trump to prepare for a possible ground operation on Kharg Island—a critical oil export hub handling nearly 90% of Iran’s shipments.
The United States has already increased military deployments in the region, further heightening tensions. This ongoing risk environment continues to strengthen the US Dollar—the world’s primary reserve currency—while limiting gold’s recovery potential.
Looking ahead, gold traders will closely monitor geopolitical developments and quarter-end positioning flows, both of which could significantly influence short-term price action.
Overall, technical indicators and geopolitical risks suggest that downside pressure on gold remains intact in the near term, especially after the rejection at the $4,600 resistance level.