Gold Rally Intact — Why Iran and the Fed Matter More Than Tariffs

Key Points

• Spot gold rallies as the U.S. Dollar declines due to tariff uncertainty.
• Iran nuclear talks are resuming, coinciding with a military deadline set by Trump.
• A critical Fibonacci level at $5143.89 is pivotal for gold's price direction.
• A breakout above this level could target $5600 this week.

Market Analysis

Spot gold has gained traction as the U.S. Dollar weakened in response to uncertainties surrounding U.S. tariffs. The article suggests that while some analysts attribute this movement to a "Sell America" trade, it may be premature to draw such conclusions without further details.

The Supreme Court's ruling on Trump's tariffs was anticipated, and the subsequent announcement of an additional 15% tariff on imports was also expected. The timing of these events, rather than their occurrence, is what surprised the market.

Despite a brief selloff in January, gold remains in an uptrend, with the recent decline viewed as a necessary reset rather than a reversal. The uncertainty created by tariffs may not be sufficient to drive gold prices higher, although it could serve as a hedge against declining stock prices.

Geopolitical Factors

Geopolitical tensions, particularly between the U.S. and Iran, are influencing gold prices. Ongoing negotiations are critical, especially with a military deadline looming. The outcome of these discussions could significantly impact market volatility.

Federal Reserve Considerations

Uncertainty regarding the Federal Reserve's rate cut timeline could also affect gold prices. The market currently anticipates a low probability of rate cuts in the near term, which could cap gold's gains. The article notes that gold reached a peak following the last Fed meeting, indicating that investor sentiment is closely tied to Fed communications.

Technical Outlook

The gold market's direction this week is likely to hinge on the Fibonacci level at $5143.89. A sustained position above this level could lead to a target of $5600, while a drop below it may revert prices to a range-bound scenario.

Conclusion

The article concludes that the narrative surrounding tariffs is secondary to the more pressing issues of geopolitical tensions with Iran and the Federal Reserve's monetary policy. These factors are expected to be the primary drivers of gold prices moving forward.