Gold sinks $150 on Iran escalation fears; $5,000 target still alive?

Gold prices retreated sharply on Thursday as the US President Donald Trump announced that military engagement in Iran would continue for the next few weeks.

The announcement was followed by a jump of more than 5% in oil prices, which raised concerns about higher inflation and thereby limited hopes of interest rate cuts.

Gold demand falls when interest rates are high, as the precious metal is an unyielding asset.

Bullion reached its highest level since March 19 before Trump's remarks. Prices had climbed above $4,800 per ounce for the first time in two weeks.

The precious metal has dropped approximately $150 from its high during the Asian session.

Given that investors are still reacting to evolving geopolitical headlines, high volatility is expected to persist.

At the time of writing, the COMEX gold contract was at $4,664.51 per ounce, down 3.1%, while silver was down 7% at $70.900 an ounce.

Sensitive to market developments

Addressing the nation in a prime-time address late on Wednesday, Trump declared that the US would conduct aggressive strikes against Iran over the coming two to three weeks, asserting that the conflict's "main strategic objectives" were nearing completion.

The Iran conflict, which began on February 28, has already impacted gold prices, causing an 11% drop in March—its worst monthly performance since 2008.

The subsequent spike in oil prices has raised inflation fears, complicating the Federal Reserve's monetary policy decisions.

Consequently, expectations for US interest rate cuts remain low throughout most of 2026.

Speculation on a December rate reduction, specifically, has significantly decreased to just 12%, down from approximately 25% following recent comments by Trump.

“Given that the gold price remains highly sensitive to developments surrounding the ongoing conflict in the Middle East, the immediate reaction to the closely-watched US Nonfarm Payrolls (NFP) report on Friday is more likely to be limited,” Haresh Mengani, editor at FXStreet, said in a report.

“Nevertheless, the fundamental backdrop warrants some caution before positioning for an extension of the recent goodish rebound from the $4,100 mark, or a four-month low set last week.”

Bears take control

The technical outlook for gold favors the bears, as Thursday's price failed near the $4,800 level and the 200-period Exponential Moving Average (EMA) on the 4-hour chart, Menghani said.

This EMA, which previously acted as support, is now confirmed as a resistance breakpoint.

The Relative Strength Index (RSI) has been pulling back from overbought levels above 70, dropping towards the mid-50s, according to Menghani.

Similarly, the Moving Average Convergence Divergence (MACD) indicator has retreated from its recent peaks.

These movements indicated a decrease in upward momentum, but do not yet signal a complete trend reversal, Menghani added.

“Meanwhile, some follow-through selling could drag the Gold price to the next support at $4,600, where prior demand converged with the latest momentum cool-off,” he said.

Should the price fall to this level, the path toward $4,550 would be cleared.

Conversely, initial resistance is expected at the recent swing high around $4,787, with a move beyond that point targeting the $4,820 to $4,830 range.

$5,000 still on the cards?

Looking ahead, a near-term target of $5,000 for gold appears achievable, Eugenia Mykuliak, founder & executive director of B2PRIME Group, said in an emailed commentary. 

However, it is unlikely that this ascent will be a smooth, uninterrupted climb. The $5,000 mark remains a significant psychological threshold that the market will need to overcome, she said.

Despite the recent resurgence in price, the events that transpired in March have likely left the market somewhat cautious. 

“$5,000 is still an important psychological level, and despite the price growing again, after what happened in March, the market probably needs a bit more time before it fully trusts the asset again,” Mykuliak added.

“That said, if the dollar continues to weaken, yields stay relatively contained, and the Fed doesn't deliver any hawkish surprises, gold has a credible path to testing that level over the coming weeks.”