Gold: What’s Next for the Yellow Metal as US-Iran Tensions Cloud the Outlook?

began the week on the back foot, gapping lower overnight before steadily clawing its way back towards Friday’s closing levels. The renewed escalation in the Middle East over recent days has subtly altered the near-term outlook, tilting risks slightly to the downside. The concern here is fairly straightforward: a sharper rise in oil prices could buoy the US dollar and push higher, both of which tend to weigh on gold.

For now, the move in oil has been relatively contained, with rising by roughly 5% to hover near $95 a barrel. Nonetheless, the backdrop remains fragile. The US seizure of an Iranian-flagged vessel near the Strait of Hormuz has prompted stern warnings from Tehran, including the prospect of retaliation and further disruption to already delicate negotiations. With a two-week ceasefire due to lapse on Wednesday and little meaningful progress to show, uncertainty continues to hang over proceedings. Iran has, for the time being, reversed its brief reopening of the strait, accusing the US of failing to honour its commitments while maintaining pressure on Iranian ports.

Before discussing the macro factors further, let’s take a quick look at the chart of gold…

Gold Technical Analysis

As can be seen from the chart of gold, the metal finds itself pressing against a notable resistance band between $4,800 and $4,850. This zone carries weight, representing a confluence of prior support and resistance, alongside the underside of a broken bullish trendline and the 61.8% Fibonacci retracement.

Since early April, prices have tested this region several times without managing a decisive break higher. That said, the absence of aggressive selling pressure is noteworthy. Repeated tests of resistance without a meaningful pullback often hint at underlying strength, increasing the likelihood of an eventual breakout—though confirmation is still required.

A daily close above $4,850 would provide that confirmation, signalling a bullish reversal and opening the door for further gains. In such a scenario, attention would turn to the $5,000 level, which not only aligns with the 78.6% Fibonacci retracement but also carries clear psychological significance.

On the downside, initial support sits around $4,750, followed by $4,600 and then $4,500. The key threshold, however, lies at $4,400. This level has proven its importance before—acting as support in early February and, despite a brief dip below it in late March, quickly being reclaimed as prices rebounded.

So long as $4,400 holds, the broader bullish trend remains intact, even if the near-term picture appears somewhat unsettled.

Can Gold Still Find Its Footing?

Despite the increasingly heated rhetoric, there are still faint signs that diplomacy has not been entirely abandoned. Donald Trump has struck a cautiously optimistic tone regarding the chances of a deal, even while warning that military action against Iranian civilian infrastructure remains on the table should talks collapse.

Tehran, meanwhile, is holding its ground. The lifting of the Hormuz blockade remains a key condition for any meaningful engagement, and officials continue to stress that significant disagreements—particularly around nuclear matters—are far from resolved. Even so, financial markets have, thus far, taken the developments in their stride.

Behind closed doors, quieter diplomatic channels appear to be active. Pakistan’s Army Chief, General Munir, is said to have engaged with Trump, reinforcing the point that the Hormuz blockade is a central obstacle. Reports suggest Trump has acknowledged this perspective, though whether it translates into tangible progress remains to be seen.

Should negotiations resume and yield a breakthrough, the resulting boost to risk appetite could well propel gold towards the $5,000 mark. Failing that, investors should brace for a rather uneven path ahead.

A Waiting Game for Now

At present, the outlook for gold is finely balanced. Much will hinge on the trajectory of bond yields and the US dollar, both of which are closely tied to inflation expectations and, crucially, oil prices. In that sense, developments in the Middle East remain the dominant driver.

For now, patience seems the most prudent stance.

Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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