Gold Prices Plummet 7% Amid Escalating US-Iran Tensions

Gold Prices Continue to Volatile Amid US-Iran Tensions

The ongoing US-Iran war has resulted in a volatile market for safe-haven assets, with gold prices declining by nearly 7% since February 28. Despite continued geopolitical tensions, gold prices rose around 2.2% over the week, but gains were limited as crude oil jumped more than 10%, heightening inflation worries and disrupting the usual safe-haven appeal.

According to Sugandha Sachdeva, Founder of SS Wealth, gold prices have been affected by the uncertainty surrounding the US-Iran conflict. Early indications from Donald Trump and Iran pointed toward a possible ceasefire, but the tone has since shifted, with stronger rhetoric and fresh threats of extended military action. Iran's IRGC Navy continues its blockade of the Strait of Hormuz, keeping oil prices elevated and fuelling concerns around imported inflation.

Macro Economic Factors Contribute to Dollar Strength

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From a macro standpoint, the US economy showed resilience in March, with labour market data exceeding expectations. Non-farm payrolls rose by 178K against estimates of 65K, the unemployment rate came in lower at 4.3% versus the 4.4% forecast, and wage growth remained steady. These factors reinforce the likelihood of the Federal Reserve maintaining a hawkish stance, which supports the dollar and caps gains in bullion.

ETF Outflows Weaken Investor Demand for Gold

Continued ETF outflows during March, with redemptions far outpacing inflows, signal weakening investor demand for gold, Sachdeva opined.

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Gold Prices Likely to Remain Volatile

Sachdeva believes that as long as oil prices remain elevated and rate-cut expectations stay delayed, bullion is likely to witness sharp, headline-driven volatility rather than a sustained directional rally. "In essence, gold remains caught between geopolitical uncertainty and macro headwinds, with price action increasingly dictated by crude oil trends and dollar strength," she added.

Ponmudi R, CEO of Enrich Money, also noted that overall sentiment remains cautiously optimistic, with commodities slowly transitioning from consolidation to a recovery phase. However, the lack of strong follow-through buying across global markets clearly indicates a wait-and-watch approach.

Technical Outlook of Gold Prices

On the technical outlook of COMEX gold, Ponmudi said that the prices are holding above key short-term moving averages while continuing to face resistance in the $4,700–$4,750 zone. Price action indicates underlying weakness, with geopolitical support failing to generate strong upside momentum.

Key Resistance Levels Must be Reclaimed

A decisive breakout above $4,800 can push prices toward $4,850, with further upside extending to $4,900, where strong supply is expected. On the downside, a sustained break below $4,600 may accelerate selling toward $4,550–$4,500, with extended weakness dragging prices toward $4,400. The overall structure remains fragile, with downside risks dominating unless key resistance levels are reclaimed.