Gold Holds Tight Range as Mideast Tensions Offset Dollar

Key Moments

Gold Steadies as Dollar Strength Caps Recovery

Gold (XAU/USD) was little changed on Thursday, retracing earlier declines but struggling to extend gains as a stronger US Dollar restricted the upside. The metal rebounded from intraday lows near $5,125 to trade around $5,170 at the time of writing, even as US Treasury yields eased after climbing earlier in the week.

Price action remained confined within a well-defined band, with the metal lacking clear directional conviction. Ongoing geopolitical tensions, particularly the US-Iran war, continued to support safe-haven flows and helped limit deeper pullbacks.

However, worries that the conflict could trigger an Oil-driven inflation shock reinforced a hawkish Federal Reserve (Fed) narrative, supporting the USD and keeping Treasury yields broadly elevated. This combination has curbed further strength in the yellow metal despite the risk-off undercurrent.

Geopolitics, Oil Supply Risks, and Fed Expectations

The US-Iran war entered its thirteenth day on Thursday, with hostilities escalating across the Middle East and no meaningful signs of de-escalation. US President Donald Trump said on Wednesday that the war with Iran could end “soon,” telling Axios in a brief phone interview that there is “practically nothing left to target.”

Iranian President Masoud Pezeshkian indicated that Tehran would only contemplate ending the conflict if certain conditions were met, including recognition of Iran’s “legitimate rights,” payment of war reparations, and assurances against future aggression.

The conflict has disrupted global Oil movements through the Strait of Hormuz, as Iran has targeted Oil tankers and commercial vessels near this critical maritime chokepoint. This has amplified concerns over prolonged supply interruptions.

Oil prices have risen sharply since the onset of the conflict and remain volatile despite efforts to stabilize the market. The International Energy Agency (IEA) agreed to deploy 400 million barrels from emergency reserves, including 172 million barrels drawn from the US Strategic Petroleum Reserve.

According to a BHH report, approximately 15 million barrels per day (mb/d) of crude Oil transit the Strait of Hormuz, or about 10 mb/d if alternative routes operate at full capacity. Based on these figures, the IEA’s emergency release could offset roughly 27 to 40 days of disrupted supply.

In this environment, markets have further scaled back expectations for Fed rate cuts. Traders are now discounting about 25-30 basis points (bps) of easing by December, compared with more than 50 bps before the conflict began, according to the CME FedWatch tool. Recent US inflation readings have also supported a cautious stance from policymakers, with attention now turning to the Personal Consumption Expenditures (PCE) Price Index report due on Friday.

Technical Picture: Gold Locked in $5,000-$5,250 Range

From a technical standpoint, XAU/USD remains in a consolidation phase on the daily chart, trading between $5,000 and $5,250. This sideways movement reflects a pause within the broader uptrend.

The short-term outlook still leans modestly bullish, as spot prices are holding above the rising 21-day and 50-day Simple Moving Averages (SMAs). Both shorter-term SMAs are positioned comfortably above the 100-day SMA, underscoring a supportive underlying trend structure.

The Relative Strength Index (RSI) is hovering near 55 and remains above the neutral 50 level, indicating that positive momentum has not yet been negated. At the same time, the Average Directional Index (ADX) has slipped toward 12, signaling a weakening trend and a lack of strong directional drive.

On the topside, $5,200 remains the first notable resistance area, followed by Tuesday’s high near $5,238. A clear break above this confluence zone could reinvigorate buying interest and pave the way for a move toward $5,419, corresponding to the March 2 peak.

On the downside, initial support is seen near the 21-day SMA around $5,115. Below that, the 50-day SMA near $4,932 provides the next buffer against deeper declines. A sustained drop through this area could invite additional selling and expose the 100-day SMA around $4,556 as the next important downside level.