Fundamental & Geopolitics
Easing tensions between the United States and Iran have triggered a risk-on sentiment across global financial markets. As concerns over potential oil supply disruptions faded, declined sharply, reducing inflation expectations.
As a result, investors rotated into US Treasuries, driving bond prices higher and Treasury yields lower. At the same time, the US Dollar weakened as demand for traditional safe-haven assets eased, while advanced by around 1%, supported by the weaker Dollar and lower Treasury yields.
In summary: The de-escalation of the US-Iran conflict reduced demand for safe-haven assets, pushed oil prices lower, weakened the US Dollar, drove Treasury yields down, and supported gains in both global equities and gold.
Technical Analysis, , & WTI
The easing of tensions between the United States and Iran triggered gap-down openings in the US Dollar Index (DXY), US 10-Year Treasury Yield, and , reflecting reduced safe-haven demand and easing inflation concerns as energy supply risks normalised.
However, the broader bullish structure of both the DXY and the US 10-Year Treasury Yield remains intact, while the sharp decline in crude oil prices could continue if geopolitical tensions remain contained. Over the next one to two trading sessions, there is an estimated 60% probability that these three instruments will trade sideways with a bearish bias ahead of the FOMC meeting. Meanwhile, there is a 40% probability of a rebound or partial gap fill, particularly if market expectations shift towards a more hawkish Federal Reserve or new fundamental catalysts emerge.
Gold – Daily & 4-Hour
On the Daily time frame, gold remains within a medium-term bearish market structure. Nevertheless, selling pressure has started to ease after price successfully defended a key support zone and formed a strong bullish rejection, signalling renewed buying interest.
In addition, price has reclaimed the 20-day Simple Moving Average (SMA 20), suggesting that short-term bullish momentum is beginning to develop. If the daily candle closes above the SMA 20, the probability of further upside increases, with the first target being the nearest resistance level, followed by the dynamic resistance at the SMA 50. Fundamentally, the weaker US Dollar and lower US Treasury yields following the easing of US-Iran tensions continue to provide support for gold prices in the near term.
On the 4-hour chart, gold opened with a gap following the shift in market sentiment after geopolitical tensions in the Middle East eased. Technically, price is now trading above both the SMA 20 and SMA 50, indicating that short-term bullish momentum is gaining strength.
In the near term, gold may perform a partial gap fill as part of a healthy retracement before resuming its upward move. As long as price remains above both moving averages, the short-term bias remains bullish, with the nearest resistance acting as the primary upside target. This scenario is supported by a weaker DXY, declining US Treasury yields, and lower oil prices, all of which reduce inflation concerns and enhance gold’s attractiveness as an investment asset.
Conclusion
The easing of tensions between the United States and Iran has become the primary catalyst driving a risk-on shift across financial markets, leading to weakness in the US Dollar Index (DXY), lower US 10-Year Treasury yields, and a sharp decline in WTI crude oil as concerns over energy supply disruptions and inflation eased.
These developments have created a supportive environment for gold, which is showing early signs of recovery after holding above a key support level on the Daily chart and reclaiming the SMA 20. On the 4-hour chart, bullish momentum is strengthening as price trades above both the SMA 20 and SMA 50, with the potential to complete a partial gap fill before advancing towards the next resistance level.
Provided there is no renewed geopolitical escalation or a more hawkish-than-expected Federal Reserve ahead of the FOMC meeting, there is an estimated 60% probability that the DXY, US 10-Year Treasury Yield, and WTI will continue to weaken, supporting further gains in gold over the short term. Conversely, there remains a 40% probability of a rebound or partial gap fill in the DXY and Treasury yields, which could temporarily limit gold’s upside momentum.
Disclaimer: This analysis is for educational and informational purposes only and should not be considered financial or investment advice. Please conduct your own research before making any trading decisions.
