Gold Outlook: Amid U.S.-Iran Tensions, Will Gold Prices Rise or Fall?

Judging from gold's recent price action, the biggest variable remains the U.S.-Iran situation. The market is simultaneously betting on a potential restart of dialogue and worrying that the conflict has not truly ended. Oil prices retreat at any sign of easing tensions, but quickly rebound if negotiations stall. As of the European session on April 17, WTI crude fell below $90.00 and Brent dropped to around $94.00, as expectations for talks and a ceasefire intensified.

For gold, oil prices are not a secondary factor but a critical transmission mechanism. Rising oil prices first push up transportation, food, and manufacturing costs, subsequently fueling market fears of a resurgence in U.S. inflation. Once inflation picks up, expectations for Fed rate cuts cool significantly, putting downward pressure on gold.

New York Fed President Williams has publicly stated that the war is pushing up inflationary pressures through energy prices; St. Louis Fed President Musalem also believes that oil price shocks could keep core inflation around 3% this year, providing reason to keep interest rates steady for some time.

Judging by current market sentiment, the scope for interest rate cuts this year has narrowed significantly. While the market had previously anticipated multiple cuts within the year, those expectations have been steadily dialed back amid rebounding oil prices and persistent inflationary pressure.

According to the CME FedWatch Tool, traders have scaled back their expectations from two rate cuts this year to just one before year-end; meanwhile, the probability that rates will remain unchanged through the end of the year is also rising. Deutsche Bank has even suggested that the Federal Reserve could keep rates on hold throughout 2026, should Middle East tensions continue to drive up energy inflation.

This presents a double-edged sword for gold. On the one hand, the market sees a low probability of future Fed rate hikes, meaning gold retains its macro support; on the other hand, if interest rates remain elevated for longer, it will be difficult for gold to stage a sustained unilateral rally.

Notably, the underlying support for gold remains intact as major global central banks continue to increase their holdings.

According to data from the World Gold Council, global gold demand reached a record high of 5,002 tonnes in 2025, with investment demand growing significantly; annual net purchases by central banks reached 863 tonnes, and the World Gold Council expects this figure to edge lower to 850 tonnes in 2026, though it remains at a very high level.

Crucially, the People's Bank of China continues to consistently increase its gold holdings. According to PBOC data, China's gold reserves stood at 74.38 million ounces at the end of March, up from 74.22 million ounces at the end of February, marking the 17th consecutive month of increases. This indicates that official demand for gold allocations remains robust even against the backdrop of high gold prices.

This point is critical. Unlike short-term speculative capital in the market that rushes in when bullish and exits when bearish, central bank activity is slower but more stable. As long as this trend persists, it provides a solid floor for gold prices. Consequently, even if gold undergoes a correction due to falling oil prices or a strengthening dollar in the short term, the decline is typically limited. There are always buyers waiting at lower levels, which distinguishes gold from many other common commodities.

Gold daily chart, Source: TradingView

Based on the gold daily chart, recent price action has trended lower under pressure from the $4,870.00 resistance level. As of the European session on April 17, gold is trading near $4,790.00. During the day, the price tested the $4,760 level multiple times without a breakdown. Furthermore, this position sits above the 0.5 Fibonacci retracement line, while the 20-day and 30-day moving averages provide short-term support. Gold has formed a support resonance at this level, and short-term bullish momentum is gradually strengthening.

Gold weekly chart, Source: TradingView

From the weekly chart, gold prices halted their decline and rebounded near the $4,100.00 support level on March 23. The weekly candlestick formed a bullish candle with a long lower shadow, while the closing price settled above the weekly MA30 and held firm above the $4,380.00 support level—a high established in October 2025. This indicates that although gold prices fell sharply in March, the overall upward trend has not been compromised.

At the same time, the moving average system shows that short-term, medium-term, and long-term moving averages are in a bullish alignment, further corroborating that the medium-to-long-term trend for gold remains bullish.

Support levels: 4760, 4644

Resistance levels: 4870, 5000

This content was translated using AI and reviewed for clarity. It is for informational purposes only.