Gold price (XAU/USD) extends its gains for the second successive session on Thursday as traders seek safety amid the ongoing war in the Middle East. US and Israeli strikes across Iranian territory and widespread Iranian missile and drone retaliation across the Middle East, including attacks on regional targets and military sites, prolong the crisis and its impact.
A US submarine reportedly sank an Iranian warship off the coast of Sri Lanka, escalating hostilities. US Defense Secretary Pete Hegseth called it the “first such attack on an enemy since World War II.” The broader campaign has entered its sixth day, heightening fears of a prolonged conflict.
The dollar-denominated Gold attracts investors as the US Dollar (USD) weakens on tentative hopes that the Middle East conflict may be shorter than feared. It is worth noting that a weaker US Dollar makes the precious metal cheaper for buyers with foreign currencies, boosting demand.
Reuters cited The New York Times reporting that Iran’s Ministry of Intelligence signalled to the US Central Intelligence Agency (CIA) a willingness to explore talks to end the war. However, Tehran later denied the report, leaving the conflict’s duration and economic fallout uncertain.
Meanwhile, the US is set to introduce a temporary 15% global tariff this week, replacing the 10% rate enacted after the Supreme Court invalidated most of President Donald Trump’s earlier levies. Treasury Secretary Scott Bessent said the rate could return to previous levels within five months as fresh trade probes advance.
The upside in non-yielding Gold may be capped as surging oil and gas prices rekindle inflation fears, prompting traders to push back expectations for Federal Reserve (Fed) rate cuts. Meanwhile, the US 10-year Treasury yield rose for a fourth straight session, climbing to 4.11% as markets assessed developments in the Iran conflict, tariff updates, and incoming economic data.
Gold rises to near $5,200 as bullish bias prevails
Gold price (XAU/USD) is trading around $5,190 at the time of writing. The technical analysis of the daily chart suggests a bullish bias as the metal price remains within the ascending channel pattern.
Additionally, the near-term bias is mildly bullish as the Gold price holds above the rising 50-day Exponential Moving Average (EMA) and consolidates after reclaiming the short-term nine-day EMA, which now tracks just below the market. Momentum remains positive but not overstretched, with the 14-day Relative Strength Index (RSI) hovering in the mid-50s, indicating steady buying pressure rather than exuberant strength and keeping scope for further upside while this structure persists.
The XAU/USD pair may explore the region around the upper boundary of the ascending channel at $5,470, followed by the all-time high of $5,598, reached on January 29. On the downside, the immediate support lies at the nine-day EMA of $5,163, followed by the lower boundary of the channel at $5,070. A break below the channel would expose the 50-day EMA at $4,874.
(The technical analysis of this story was written with the help of an AI tool.)
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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