Gold rose on Thursday after comments from US President Donald Trump that the US and Iran are close to an agreement, which weighed on the dollar and helped bullion recover part of Wednesday’s decline. Spot XAU/USD traded at $4,212, up 3.50%. Trump said a deal could be signed as soon as the weekend, potentially reopening traffic through the Strait of Hormuz; Iran-linked FARS reported that the US had accepted Iran’s proposed text and that approval by senior authorities was likely. The US Dollar Index fell 0.42% to 99.66, supporting the non-yielding metal.
On the data front, US producer prices rose 6.5% year on year in May versus 5.7% in April and a 6.4% consensus, while core PPI increased 4.9% against expectations of 5.4% and matched April. Prime Terminal indicated that the PPI release, together with the prior day’s CPI, left market pricing for a Federal Reserve rate rise towards the end of 2026 intact. Initial Jobless Claims for the week ending 6 June rose to 229K, above the 219K forecast, with the University of Michigan’s preliminary June consumer sentiment reading due later. Technically, gold previously hit a six-month low at $4,023 after breaking $4,098; RSI remains oversold but above 20. A drop below $4,000 would expose $3,886, while resistance sits at the 200-day SMA of $4,443 and then $4,500.
Impact Of Geopolitical Events And Market Volatility
We see this sharp rally in gold as a direct result of the potential US-Iran deal news, which has weakened the US dollar. However, we believe this could be a temporary, news-driven spike rather than a fundamental change in the trend. This strength offers a potentially attractive level to initiate bearish positions in the coming weeks.
Geopolitical shocks often create short-term volatility that can mislead traders. Historically, similar de-escalation headlines in the Middle East have caused gold to pop before resuming its prior trend once the market digests the news. Considering that the CBOE Gold Volatility Index (GVZ) often spikes on such events, we see this as a period of heightened risk and opportunity, not a sustained bull run.
Technical Analysis And Trading Strategies
The underlying economic data, like rising jobless claims and mixed inflation reports, creates uncertainty, but the market’s expectation for a Fed rate hike by year-end remains a powerful headwind for gold. The US Dollar Index, despite today’s dip, has shown underlying strength for months, and a hawkish Fed would likely reinforce that trend. A stronger dollar makes gold more expensive for foreign buyers, capping its potential.
From a technical perspective, the overall trend for gold is bearish, and this rally brings the price closer to significant resistance levels. We are treating this move toward $4,200 as an opportunity to sell at a better price, with the 200-day moving average around $4,443 acting as a major ceiling. The Relative Strength Index (RSI) suggests the downtrend has room to continue once this short-term buying pressure fades.
Therefore, we are looking at strategies that profit from a decline in gold’s price over the next several weeks. Buying put options with strike prices below $4,000 would allow us to capitalize on a move toward the support level at $3,886 while strictly defining our risk. Alternatively, we could establish bear call spreads to collect premium, betting that the price will not break through key resistance levels.
Our bearish stance would only be challenged if gold manages to reclaim and hold above the 200-day moving average at $4,443. A sustained move above that level would indicate a structural shift in the market, forcing us to reconsider our position. Until that happens, we will view rallies like this one as selling opportunities.
