Gold Technical Analysis: Strong Dollar Caps Upside Despite US-Iran Tensions

Author: Muhammad Umair

Published: March 13, 2026

Key Points

• Gold prices surged following U.S. and Israeli strikes on Iran but quickly reversed, stabilizing in a narrow range.
• A stronger U.S. dollar and rising Treasury yields have limited gold demand amid ongoing geopolitical tensions.
• The overall trend remains bullish as long as gold holds above key support levels, with potential for a breakout above resistance.

Market Reaction to Geopolitical Events

Gold (XAU) experienced a rapid increase in value after the U.S. and Israel conducted military strikes on Iran on February 28, 2026. Spot gold prices rose from $5,275 to $5,419 per ounce as investors sought safe-haven assets. However, this rally was short-lived, with gold prices dropping over 5% to $4,996 by March 3. Since then, gold has been trading within a narrow range of $5,050 to $5,200, indicating that the conflict has not led to a sustained rally.

Influence of the U.S. Dollar and Treasury Yields

The demand for gold has been constrained by a stronger U.S. dollar and increasing Treasury yields. Rising oil prices are contributing to inflation concerns, which may lead central banks to maintain higher interest rates for an extended period. Higher interest rates typically favor interest-bearing assets like government bonds, making gold less attractive.

Market Behavior During Crises

Market behavior during times of crisis has also contributed to recent volatility. Some institutional investors have become cautious, as gold has shown strong movements in recent months. In financial stress situations, even safe-haven assets like gold may be sold off to raise cash, leading to temporary price declines. However, any corrections in gold prices are likely to find support for future upward movements.

Technical Analysis of Gold

Daily Chart Analysis

The daily chart for spot gold indicates strong consolidation above the $5,000 level, which is considered a critical support level. A break below this level could signal further downside towards $4,800. Despite the current consolidation, the overall outlook remains bullish, as the price is forming an ascending broadening wedge pattern.

Short-Term Outlook

The 4-hour chart shows that gold is stabilizing above the $5,000-$5,100 range. A break below $5,000 could trigger a significant drop towards $4,770. Conversely, a breakout above $5,400 could lead to further gains towards $5,600. If gold fails to hold above $5,000, a deeper correction towards $4,800 or lower may occur before the long-term bullish trend resumes.

US Dollar Technical Analysis

The US Dollar Index has shown strength after hitting long-term support at 96.50 on January 27, 2026. Following a breakout, the index reversed sharply and broke above the 200-day SMA at 98.40. The current consolidation between 96.50 and 100.50 suggests that a break above 100.50 could push the index towards 102, while a failure to hold above 98 could lead to a drop towards 96.50.

Conclusion

Gold remains in a consolidation pattern as markets react to geopolitical risks, rising oil prices, and a stronger U.S. dollar. Holding above $5,000 indicates that the broader bullish structure is intact. Short-term movements in the U.S. dollar and Treasury yields will likely continue to influence gold prices. A stronger dollar may limit upside potential, while easing yields could renew buying interest.

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