Gold News: Gold Price Retreats on Easing Iran Tensions and Surging Dollar Strength

Momentum Stalls as Gold Retreats from Record Highs

Spot Gold (XAUUSD) is edging lower on Thursday, with price action also subdued for a third session, suggesting it is losing upside momentum and may be getting ready for a near-term correction but not a change in trend.

At 13:38 GMT, XAUUSD is trading $4,595.76, down $30.81 or -0.67%.

Rising Yields and Surging Dollar Apply Pressure

Higher Treasury yields and a stronger U.S. Dollar are weighing on dollar-denominated gold. Yields found support at the 50-day moving average at 4.126% before moving up to 4.16%. The move helped boost the greenback to 99.129, its highest level since December 2. It also put the dollar index in a position to break out over resistance at 99.384. There is room to run over this level, which could curb gains in gold or fuel an even deeper correction.

Trump’s Greenland Focus and Iran Pivot Shape Safe-Haven Demand

According to Reuters, gold traders are eyeing President Trump’s focus on Greenland as one reason for underlying support, the other being the situation in Iran. Trump’s remark that he may pause military action against Iran has dampened safe-haven demand for bullion after the Iranian government’s violent response to protesters drove gold to a record high of $4,642.97 on Wednesday.

Regarding Greenland, Trump said on Wednesday that the U.S. needs Greenland and that Denmark cannot be relied upon to protect the island, Reuters noted. As for Iran, Trump said he had been told that killings in Iran’s crackdown on protests were easing, Reuters also said, suggesting the President would take a wait-and-see approach to the situation.

Rate Cut Expectations Keep Dip-Buyers Engaged

Despite the lost momentum, investors are actually looking forward to the possibility of a near-term correction. Not only is the market being supported by the 50-day moving average, which helps maintain the “buy the dip” trading strategy, but expectations of up to at least two 25-basis-point rate cuts this year are also underpinning the valuable asset.

Low interest rate expectations are propping up the market and controlling the uptrend, while bouts of safe-haven demand are powering gold higher over the short term.

Key Technical Levels Signal Potential Correction Zone

Technically, the main trend is up according to the daily swing chart and the 50-day moving average. A trade through $4,642.97 will signal a resumption of the uptrend, while a move below $4,274.02 changes the trend to down. If there is a near-term correction, a 50% level at $4,458.49 will be the first downside target and value-buying opportunity.

The major support and trend indicator is the 50-day moving average at $4,274.40.

Short-Term Outlook: Correction Likely, But Uptrend Remains Intact

Looking ahead, rising yields and a stronger dollar as well as easing geopolitical concerns could weigh on gold and force a correction into the pivot at $4,458.49. With the main trend up, buyers will embrace any pullback as a buying opportunity. This process is likely to continue as long as the 50-day moving average support remains intact.

More Information in our Economic Calendar.