Gold rallies above $4,100 to a two-week peak amid intensifying Middle East conflict.

Gold surged to a two-week high above the $4,100 mark during Wednesday’s Asian trading session. The precious metal found support from optimism that diplomatic initiatives could help ease geopolitical tensions. However, persistent concerns over energy-related inflation continue to strengthen expectations that the Federal Reserve may maintain a hawkish stance on interest rates. Higher rate-hike expectations, coupled with escalating US-Iran tensions, could provide support for the US Dollar and potentially limit further gains in gold prices.

Fundamental Analysis

The US Dollar (USD) traded with a stronger tone on Tuesday, but Gold also advanced, an unusual combination that highlighted rising market uncertainty. The precious metal moved further away from the key $4,000 level and hovered near an intraday high of $4,084, reflecting strong demand for safe-haven assets. Notably, Gold appeared to be outperforming the USD, a rare occurrence during periods of heightened risk aversion.

Investor concerns intensified after US President Donald Trump threatened to impose sweeping 50% tariffs on a range of Canadian goods, accusing Ottawa of maintaining unfair trade practices against American products. Although some market participants viewed the threat as a negotiating tactic, the announcement reinforced worries that trade tensions could contribute to longer-lasting inflationary pressures.

As the US trading session progressed, Gold, the US Dollar, and Wall Street equities all moved higher simultaneously—an uncommon market dynamic. The gains came despite fresh comments from President Trump indicating a willingness to escalate military action against Iran while signaling that negotiations with Tehran were no longer a priority, adding another layer of geopolitical uncertainty to global markets.

Technical Analysis

While recent price action has improved, it may be premature to confirm a sustained bullish breakout in XAU/USD. On the four-hour chart, gold maintains a constructive tone, trading above both the 100-period SMA at $4,067.46 and the 20-period SMA at $4,017.34. However, the 200-period SMA at $4,133.13 continues to act as a significant resistance barrier. Supporting the near-term bullish outlook, the RSI is trending higher around 61, while the Momentum indicator remains firmly positive, signaling strengthening upside pressure.

The broader daily chart presents a more cautious picture. Gold remains well below the 100-day and 200-day SMAs, located at $4,510.85 and $4,495.98 respectively, indicating that the longer-term trend remains under pressure. The metal is holding just above the 20-day SMA at $4,062.64, which provides immediate support and suggests consolidation rather than a confirmed trend reversal. Momentum indicators remain mixed, with the RSI near 46 and the 14-day Momentum indicator still below its midpoint, reflecting only a modest improvement in underlying sentiment.

From a technical perspective, initial support is found around the confluence of the 100-period SMA at $4,067.46 and the 20-day SMA at $4,062.64. A deeper pullback could target the 20-period SMA near $4,017.34. On the upside, the primary resistance remains the 200-period SMA at $4,133.13. A decisive break above this level would strengthen the bullish case and could pave the way for a move toward the $4,200 region.