Gold is currently trading near $4,000 per troy ounce, but investors appear determined to reduce their positions. The key reason is the heated atmosphere in the Middle East. US-Iran clashes, strikes on infrastructure targets, and the ongoing risk of oil supply disruptions through the Strait of Hormuz have recently heightened uncertainty across markets. Moreover, the escalating crisis has once again pushed Brent crude prices higher. They have surged by roughly 15% over the past week, intensifying global inflation concerns.
Despite its well-known safe-haven status, gold remains largely overlooked. Under current circumstances, the non-yielding precious metal is giving way to the American currency. Capital tends to flow into dollar-denominated assets and US Treasuries during turbulent times, driven by their high liquidity and protective qualities. As a result, bullion becomes more expensive for holders of other currencies, limiting demand. Rising American government bond yields are also a serious headwind for the precious metal. Higher crude prices, in turn, boost inflation fears and could force the Federal Reserve (Fed) to keep interest rates elevated for longer—or even consider raising them. Gold, which generates no income, simply cannot compete with the US dollar and Treasuries.
From a technical perspective, bullion prices have just approached the psychologically important level of $4,000 per troy ounce. If they manage to stay above this threshold, a consolidation phase or another rebound could follow. But once the metal breaks below this critical line and settles in the mentioned zone, selling pressure is likely to intensify, pushing bullion down to $3,800.
The ultimate recommendation is to sell gold at the current price of $4,040, targeting $3,800 within a month. To mitigate the risk of adverse market movements, place a Stop Loss order at $4,050.
This content is for informational purposes only and is not intended to be investing advice.
