Gold Price Forecast: 200-day EMA remains key support zone amid Middle East war
- Gold price rises to near $4,450 despite easing hopes of de-escalation in the Mideast war.
- Peace mediators stated that Tehran didnât request a 10-day pause on strikes on Iranâs energy plants.
- Hawkish commentaries from global central banks are expected to act as a key drag on the Gold price.
Gold price (XAU/USD) trades over 1% higher at around $4,450 during the European trading session on Friday. The precious metal attracts bids even as conflict statements by peace mediators against United States (US) President Donald Trumpâs claim that the 10-day pause to planned military strikes on Iranâs power plants was requested by Iran have revived fears of a prolonged Middle East war.
According to a report from the Wall Street Journal (WSJ), peace talks mediators have dismissed claims that Iran had requested a 10-day pause on strikes on its energy plants. Mediators added that Iran is yet to deliver a final response on Trumpâs 15-point plan, which forces Tehran to open the Strait of Hormuz and give up their missile program plans, but the odds that Iran will agree to those terms are very low.
In addition to the US-Iran divide, the placement of up to 10,000 additional ground troops by the Pentagon in the Middle East has also raised doubts over hopes of de-escalation in Middle East conflicts.
Signs of fading de-escalation hopes in the Middle East are expected to act as a key drag on the Gold price, assuming that the longer conflicts remain, the stronger will be the odds of the oil prices rising further.
Global inflation expectations have accelerated due to higher oil prices, which have also resulted in hawkish commentary from various central banks. Theoretically, hawkish warnings from central banks diminish the appeal of non-yielding assets, such as Gold.
Gold technical analysis
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XAU/USD trades higher at around $4,450 as of writing. The overall trend is bullish as price holds above the rising 200-day Exponential Moving Average (EMA) near $4,220. The distance between the spot and the 200-day EMA still frames the broader trend as up.
The pair has broken a sequence of higher closes and now trades well below the mid-$5,000 area, while the 14-day Relative Strength Index (RSI) at 32 shows momentum anchored in weak territory.
Immediate resistance aligns near the March 25 high around $4,600 , followed by $4,820, which is the latest breakdown zone. The spot would rise further to around $5,000 if it manages to break above $4,820. On the downside, initial support is at the 200-day EMA, which is around $4,220, followed by the March 23 low of around $4,100.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in humanâs history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesnât rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a countryâs solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
