Gold erased its weekly losses after Trump ruled out strikes on Iran before the midterms, pulling oil prices, real yields and the dollar lower. Attention now shifts to Tehran's response and next week's US CPI report, either of which could set the metal's next direction.
Trump's Iran comments spark a gold rally
Gold erased its weekly losses after Trump said on Truth Social that the US was having productive discussions with Tehran and would not attack Iran before the midterm elections. Markets reacted immediately, unwinding the escalation premium that had built up on earlier reports that Trump was weighing military strikes against Iran ahead of the vote.
As a result, oil prices, real yields and the US dollar all fell after Trump's post, triggering a rally in gold.
Tehran's reply and the CPI print are the next triggers
Iranian Foreign Minister Araghchi said Tehran was reviewing Washington's response to Iran's proposal and expected to reply within the next few days. A positive outcome could shift the outlook for gold from neutral to bullish, as easing tensions would likely put further downward pressure on oil prices, inflation expectations and rate hike concerns. A negative response, however, wouldn't change much, though it could limit gold's upside.
Next week, the focus also turns to the US CPI report. A hotter than expected reading could trigger a hawkish repricing of Fed rate hike expectations, renewing pressure on gold, while a soft report would likely ease rate hike concerns and provide another boost to the metal.
Gold technicals: trendlines in focus across timeframes
On the daily chart, gold rallied into the downward trendline and probed above it after Trump's comments. Sellers will likely step in around these levels, with defined risk above the trendline, positioning for a drop toward 3,885. Buyers, on the other hand, will keep piling in above the trendline, with defined risk below it, targeting 4,700 next.
The 4-hour chart shows price trading above the trendline but facing strong resistance around 4,228; sellers will likely keep defending that level toward 3,885, while buyers want a break higher to extend bullish bets toward 4,700, with 4,400 as the first target. Meanwhile, the 1-hour chart shows an upward trendline defining the current bullish momentum, with buyers looking to lean on it during pullbacks and sellers seeking a break lower to build bearish bets into new lows.
Today's session concludes the week with the University of Michigan Consumer Sentiment survey.
Source: Investinglive
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