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Gold Price Rebounds but Downside Risks Persist Amid US-Iran Tensions
Gold prices are attempting a modest recovery, trading near $4,750 during Wednesday’s Asian session after dropping more than 2% on Tuesday. Market attention remains focused on the evolving US-Iran geopolitical situation, especially in the absence of major US economic data releases later in the day.
On the daily chart, XAU/USD is trading at $4,757.33, maintaining a constructive short-term bullish bias. Prices are holding above the 21-day and 100-day Simple Moving Averages (SMAs), located around $4,684 and $4,732 respectively. The metal is also hovering slightly above the previous descending trendline resistance breakout zone near $4,750. Meanwhile, the 14-day Relative Strength Index (RSI) sits just below the 50 level, signaling neutral but stable momentum.
On the upside, immediate resistance is seen at the upper boundary of a falling wedge pattern near $4,790. A daily close above this level would be crucial to confirm a bullish breakout from the formation. The next key resistance stands at the 50-day SMA around $4,883, where sustained upward movement could trigger a stronger recovery. On the downside, initial support is located near the former trendline resistance-turned-support around $4,750, followed by the 100-day SMA at $4,732 and the 21-day SMA near $4,684. A break below this cluster of support levels could expose deeper demand near the 200-day SMA around $4,237.
Gold Price Outlook Influenced by Geopolitical Developments
On Wednesday morning, gold prices recovered part of their previous sharp losses as sellers retreated from levels above $4,800. The recent uptick in the precious metal is largely driven by a temporary decline in safe-haven demand for the US Dollar (USD), as markets reacted positively to US President Donald Trump’s announcement of a unilateral extension of the US-Iran ceasefire.
However, the sustainability of gold’s rebound remains uncertain. US-Iran peace negotiations have stalled, with Trump reportedly awaiting a “comprehensive proposal” from Tehran amid the ongoing blockade of Iranian ports.
Iran’s military has warned of strong retaliatory actions against predefined targets in response to repeated threats from the US President, stating that they will not reopen the Strait of Hormuz while the naval blockade remains in place.
According to a recent report by the Wall Street Journal (WSJ), the United States has also restricted dollar shipments to Iraq in an effort to pressure Iran-backed militias.
This ongoing Middle East geopolitical tension is likely to continue limiting downside pressure on the US Dollar.
Additionally, stronger-than-expected US Retail Sales data has revived expectations of a Federal Reserve rate hike this year, providing further support to the USD and capping gold’s upside potential.
“Retail Sales surged 1.7% last month, the largest increase since March 2025, following an upwardly revised 0.7% gain in February,” reported Reuters, citing data from the Commerce Department’s Census Bureau.
Meanwhile, the confirmation hearing of Federal Reserve Chair nominee Kevin Warsh signaled to markets that he may adopt a less dovish stance than previously expected, should his nomination be approved.