Gold (XAU/USD) rallied for a fourth consecutive day on Wednesday, reaching a two-week high near $4,800 as the US Dollar depreciated amid growing speculation of a possible end to the Middle East conflict [1]. At the time of writing, gold traded at $4,758, marking a nearly 2% increase and accumulating almost 6% weekly gains [1]. The rally was fueled by uncertainties surrounding the conflict, with some headlines suggesting a truce while others indicated a potential extension. US President Donald Trump stated in a Reuters interview that the US would be out of the war with Iran 'very quickly,' while other sources suggested Washington was considering action on Kharg Island [1]. Axios reported that US officials are discussing a ceasefire, contingent on Iran opening the Hormuz Strait [1].
US economic data also contributed to the market dynamics. The ISM Manufacturing PMI for March rose to 52.7 from 52.4, signaling robust business activity despite rising prices, with the Prices Paid Index hitting a nearly four-year high of 78.3 [1]. The ADP Employment Change for March increased by 62K, surpassing forecasts but slightly below February's 66K [1]. Retail sales grew 0.6% month-over-month in February, marking the largest rise in seven months [1]. Despite these positive indicators, Federal Reserve officials did not bolster the US Dollar. Richmond Fed's Thomas Barkin described energy shocks as temporary but warned that rate hikes may be necessary if inflation expectations rise, while St. Louis Fed's Alberto Musalem sees current policy as well-positioned and flagged inflation risks from Middle East tensions [1].
The Atlanta Fed GDPNow estimate for Q1 2026 was revised downward from 2% to 1.9% following the latest US economic data [1]. Looking ahead, the US economic docket includes Initial Jobless Claims on Thursday and Nonfarm Payroll figures on Friday, with expectations of 60K jobs created, an improvement from February's -92K print [1].
Technical analysis shows gold climbing above the 100-day Simple Moving Average (SMA) at $4,625, reinforcing its bullish structure [1]. Analysts expect gold prices to continue rising given the current backdrop, though a de-escalation of the conflict and lower energy prices could undermine the yellow metal. Persistently high interest rates would also pose a headwind for bullion [1].
CONCLUSION
Gold's strong rally is driven by a weaker US Dollar and speculation about a Middle East truce, supported by robust US economic data and bullish technical signals. While further gains are expected, potential conflict de-escalation and higher interest rates could temper the upward momentum. The market remains highly sensitive to geopolitical and economic developments.