Gold (XAU/USD) declined sharply by 2% to near $4,410 during the European trading session on Thursday, following revived fears of persistent conflict in the Middle East. The drop comes after a strong recovery in the previous three trading days, as geopolitical tensions escalated due to Iran's rejection of US President Donald Trump's month-long ceasefire proposal and 15-point settlement plan [1]. The US proposal demanded Iran restrict nuclear weapon development and halt uranium enrichment, while Iran countered with conditions including closure of all US bases in the Gulf, compensation for attacks on Tehran's infrastructure, lifting all sanctions, and retaining its missile program without restrictions [1].
Despite the theoretical expectation that heightened geopolitical tensions would boost demand for safe-haven assets like gold, the precious metal faced selling pressure. This is attributed to concerns that ongoing Middle East conflicts could keep oil prices elevated, thereby prompting inflation expectations and restricting global central banks from easing monetary conditions. Such a scenario improves demand for non-yielding assets, but in this instance, gold is experiencing a backlash [1].
Technical analysis indicates that XAU/USD is trading lower, with a mildly bearish near-term bias as prices slide away from recent highs but remain slightly above the rising 200-day Exponential Moving Average (EMA) at $4,223, anchoring a broader uptrend. The 14-day Relative Strength Index (RSI) is oscillating in the 20.00–40.00 zone, signaling persistent selling pressure. Initial support is seen at the $4,400 area, with a daily close below this level exposing deeper weakness toward the 200-day EMA at $4,223 and the March 23 low around $4,100. On the upside, resistance is marked at the March 25 high of $4,602.48, followed by the February 17 low of $4,842.06. A decisive break above these levels would ease the immediate bearish tone and reopen the path toward the $5,000 region [1].
CONCLUSION
Gold's 2% decline to $4,410 reflects market concerns over renewed Middle East tensions and the US-Iran standoff, with technical indicators signaling persistent selling pressure. While geopolitical risks typically support gold, inflation fears and central bank policy constraints are currently weighing on the precious metal. The market remains cautious, with key support and resistance levels in focus for further price action.