Demand for Gold Remains Strong

[Ben Graham]

Yesterday, gold prices rose as traders continued to assess geopolitical tensions in the Middle East and the impact of U.S. tariffs on global trade.

The price of oil and the metal approached the mark of $5,200 per ounce, gaining almost 6% over the last six trading sessions, as the buildup of American military presence in the Middle East keeps global markets on edge. Tensions in this energy supplier region traditionally lead to rising prices for oil and associated metals, reflecting concerns about potential supply disruptions.

Recently, Washington imposed sanctions on more than 30 organizations supporting the sale of Iranian oil and weapons, further increasing pressure on Tehran ahead of the upcoming round of nuclear negotiations on Thursday in Geneva. These restrictive measures, aimed at reducing Iran's export revenues, create an additional factor of uncertainty in the energy markets. While the world watches developments in diplomatic efforts, markets are responding to potential risks posed by the escalation of the geopolitical situation.

The rise in metal prices is a direct consequence of heightened U.S. military presence in the region, combined with sanctions pressure on Iran. Investors prefer to hedge their portfolios by allocating to assets that typically benefit from rising commodity prices during periods of geopolitical instability. These factors, taken together, push prices upward, creating a nervous atmosphere in global exchanges.

During negotiations, Iran may agree to reduce its uranium enrichment level from 60% to 3.67% as part of an agreement with the U.S. Additionally, a temporary suspension of all uranium enrichment activities for 7 years is under discussion. The new round of negotiations between the U.S. and Iran is scheduled for today.

Meanwhile, the administration of U.S. President Donald Trump has continued to take steps to preserve its tariff policy, further straining relationships with trading partners. U.S. Trade Representative Jamieson Greer stated that Trump will sign a directive to raise his global tariffs to 15%. Recall that the 10% tariff took effect on Tuesday following the Supreme Court's ruling that annulled Trump's so-called reciprocal tariffs last Friday.

Recent changes in the gold market reflect a reassessment of uncertainty related to the new tariffs and geopolitical concerns.

For buyers, it is crucial to break through the nearest resistance at $5,223. This would allow targeting $5,317, above which it will be quite challenging to break through. The furthest target will be around $5,416. In the event of a decline in gold prices, the bears will attempt to gain control below $5,137. If they succeed, a breakout of this range would deal a significant blow to the bullish positions, driving gold down to a low of $5,051 with the potential to reach $4,975.

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