Gold fell by nearly 1% as risk appetite improved and flows moved into US equities. The S&P 500 rose past 7,000 and was near its record area around 7.014, while XAU/USD traded below $4,800 after peaking at $4,871.
Talk of possible US-Iran progress increased after President Donald Trump said the war was close to over. Gold’s safe-haven demand eased even as the US Dollar stayed weak.
The US Dollar Index was down 0.06% at 98.05, near a six-week low of 97.96. The US 10-year Treasury yield rose three basis points to 4.275% on expectations of no Federal Reserve rate cuts this year.
Tensions remained due to a US blockade of the Strait of Hormuz. Reuters said Iran could allow ships to use the Omani side as part of a deal.
March PPI rose to 4%, below the 4.6% forecast, with gasoline up 15.7% (BLS). Money markets priced just eight basis points of easing by year-end (PMT), while inflation was near 3%.
Technically, gold failed at $4,899 and turned lower, with $4,850 a level to regain. Support sits at $4,750, then $4,700, with moving-average levels near $4,684 and $4,640.
We are seeing a classic risk-on rotation as talk of a US-Iran deal cools geopolitical fears. This is pushing the S&P 500 toward its record high, a rally built on the back of the strong AI-led performance we saw through 2025. Consequently, gold is facing pressure as the geopolitical risk premium that was recently priced in begins to evaporate.
However, we must be cautious about fully pricing in a peace deal based on comments alone. Looking back, we saw how market sentiment turned on a dime during similar geopolitical flare-ups in 2025, which ultimately provided buying opportunities in safe havens. The ongoing US blockade of the Strait of Hormuz remains a critical flashpoint that could easily reignite conflict and send gold sharply higher.
The Federal Reserve’s firm stance against rate cuts is a major headwind for gold, which offers no yield. This isn’t a new story; we saw how the stubborn inflation of 2024 and 2025, where the annual CPI rate according to the BLS often hovered above 3%, forced the Fed to maintain restrictive policy. The recent 4% PPI reading reinforces that price pressures from energy are still filtering through the economy.
Given this setup, we should watch for an unwind in speculative long positions, which could accelerate gold’s decline toward key support levels. Data from the CFTC often shows that an overcrowded long trade is vulnerable to a washout on bearish news. Selling out-of-the-money call options to collect premium or buying put spreads on gold futures could be strategies to consider for the coming weeks.
In the immediate days ahead, the $4,800 level for XAU/USD is the key battleground. A daily close below this figure likely triggers further selling toward the $4,750 support area, making it an attractive level to watch for initiating short positions. Conversely, any failure by sellers to hold the price down could see a quick rebound to test resistance near the 50-day moving average at $4,899.
