Insights 
VT 
Gold prices have declined due to reduced demand for safe-haven assets as concerns about the Middle East tensions ease. The XAU/USD maintains its upward trend but is correcting lower after hitting resistance at $3,440, with support now focussed on $3,400.
Fears of the Iran-Israel conflict escalating have subsided, leading to a shift in demand from Gold to riskier assets. The conflict continues, but the limited impact has resulted in a market risk rally, affecting Gold’s value.
Focus On Key Support Levels
The technical analysis suggests a focus on key support levels below $3,400, with potential bearish movements if levels continue to decline. Conversely, surpassing $3,440 could pave the way for a move towards $3,500.
Historically, Gold serves as a safe-haven asset, a hedge against inflation, and has a notable inverse correlation with the US Dollar and US Treasuries. Central banks, major holders of Gold, have bolstered their reserves with 1,136 tonnes in 2022, valuing around $70 billion, reflecting a historical peak in acquisitions.
The Gold price is influenced by geopolitical tensions, economic stability, and interest rates, often rising when the US Dollar downturns or during times of lower interest rates, maintaining its value due to its dollar-based pricing.
What we’ve just observed in the gold market is a clear reaction to a change in geopolitical tension levels. As the risk premium tied to fears around the Iran-Israel confrontation loses its grip, capital that had been parked in safer territory like precious metals is now being redeployed into more speculative, higher-yielding areas. Prices for XAU/USD, which had been climbing steadily, are now easing back from resistance at $3,440. With attention now redirected to the $3,400 threshold, this level becomes pivotal for judging short-term direction. A clear, sustained break beneath may lead to renewed selling pressure, potentially dragging prices further towards levels not seen for several weeks.
Insights From The Federal Reserve
From a trading standpoint, any correction should be seen in terms of the larger trend context. The long-side structure still technically holds, but its strength is being tested. If buyers fail to defend the $3,400 area convincingly, that may be interpreted as fading momentum, at least for now. Below there, traders may seek out interim supports near layered order clusters or prior lows – areas where bid interest has previously been seen. Conversely, should the metal regain strength and push through $3,440 with volume, it opens the door toward psychological and technical areas around $3,500, where reactions are very likely.
Powell and colleagues at the Federal Reserve—as well as broader yield dynamics of US Treasuries—remain part of the backdrop here. Real interest rates and inflationary expectations dictate the attractiveness of non-yielding assets such as gold. The inverse correlation between the greenback and bullion remains intact, amplifying downward pressures any time the dollar catches a bid. It’s not so much that gold weakens independently, but more that it re-prices in reaction to shifts in opportunity cost. Recent calm in political fronts has allowed this mechanism to play out more clearly.
One cannot ignore the role that official buyers have played either. While 2022 saw central banking institutions acquiring vast amounts of bullion, this longer-term behaviour may cushion medium-term declines. However, that support is unlikely to be reactive at the intraday level and should be interpreted as macrostructural rather than immediate price floor protection. The rhythm of the market continues to be dictated by shorter-term interpretations of headline risks, rate expectations, and broader currency moves, in that order.
In practical terms for participants, vigilance over incoming economic data and monetary policy signals should remain sharp. The current trading environment does not permit passive positioning; stops should be adjusted as the narrative evolves and routes potential volatility back into price. Swift market reactions could spike either side in hours, so keeping a disciplined approach anchored to levels already validated by volume or past behaviour may be preferable to speculative chasing.
With the fading of fear-based demand, the metal is now being driven more by relative value mechanics than raw emotion or flight instincts. While the bid isn’t entirely gone, it’s certainly less desperate, and that shifts the balance of probabilities towards a more technical-led path for the immediate term.
