**Gold Market Update** Gold (XAU/USD) has dropped and is currently trading around $3,368, down from Monday’s high of $3,452. This decline is influenced by a stronger US Dollar and rising Treasury yields, which have reduced gold’s short-term attractiveness. A recent survey by the World Gold Council found increasing interest in gold accumulation. Among 73 participating central banks, 95% expect global gold reserves to grow over the next year, with more than 40% planning to increase their holdings. Major central banks have provided cautious updates, hinting at extended interest rates. The near-term decline in gold prices is affected by lowered expectations for rate cuts from the Fed, paired with a stronger US Dollar. Concerns about Iran’s enriched uranium stockpile have raised global alarms, leading to heightened geopolitical tensions. This situation could disrupt the Strait of Hormuz, impacting global oil shipments and contributing to inflation pressures. From a technical perspective, gold faces resistance levels at $3,371 and $3,400, while support is found at $3,350 and $3,318. These movements reflect a broader Fibonacci retracement, with a declining RSI indicating less buying interest. **Impact of Geopolitical and Economic Factors** Gold is a popular safe-haven asset, particularly during geopolitical risks or fears of recession. Its performance typically moves in the opposite direction of the US Dollar and interest rates. Given the recent drop in gold from Monday’s peak to around $3,368, traders should take a moment to analyze the shifting sentiment. As Treasury yields remain high and the Dollar continues to strengthen, it’s becoming challenging for gold to gain upward traction. This rise in the Dollar, largely driven by reduced expectations for rate cuts from the Federal Reserve, is putting pressure on gold prices. Any pricing models still assuming rate cuts soon may need reassessment. Top policymakers have indicated that borrowing costs will likely stay high for a while. This is less about speculating where rates might go and more about interpreting their statements to ensure inflation remains below target. Consequently, speculative positions in interest-sensitive assets like gold might face more short-term risks than previously thought. However, long-term buying patterns tell a different story. The World Gold Council survey shows strong buying intentions among central banks. A full 95% expect global reserves to rise, and nearly half plan to increase their own holdings. This genuine demand may provide a cushion for gold prices in the coming weeks, even if upward movement is paused. For those tracking capital flows or futures market activity, this institutional behavior could act as a gradual support. Geopolitical instability remains a concern. Iran’s advancements in nuclear capabilities, especially the increase in enriched uranium, have stirred global market worries. Possible disruptions in the Strait of Hormuz add to the concern, as any issues with oil shipments would have immediate effects, including sharp moves in oil prices and other inflation-sensitive assets. These are real threats with significant implications for macro hedging strategies, particularly concerning inflation protection. From a technical angle, resistance sits between $3,371 and $3,400, while support aligns around $3,350 and extends to $3,318. These levels correspond with Fibonacci retracement patterns from recent highs, giving them further significance. The RSI indicates a decreasing willingness to push prices higher, suggesting caution for new long positions in the short term. For trading strategies, it may be wise to fade rallies near the resistance area until yields stabilize or the Dollar eases. While the ‘safe-haven’ appeal of gold holds during geopolitical tensions, interest rate movements and the US Dollar are the key drivers right now. A flexible approach with close monitoring of terminal rate pricing might provide better insights than reacting to headlines alone. We should also keep an eye on real yields, especially at the longer end of the curve. As long as they remain positive and well-supported, it limits enthusiasm for price gains. This doesn’t imply an imminent reversal, but it makes aggressive long positions harder to justify unless new catalysts arise, such as increased conflict or a significant dovish shift. Otherwise, rallies may be brief, and trades based on reactions may perform better than broader trend-following strategies in the near term. Create your live VT Markets account and start trading now.

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