**Gold Prices Impacted by Political and Economic Factors** Gold prices are around $4,600, showing a slight dip due to decreased geopolitical tensions in Iran. U.S. President Trump’s potential delay in military actions and support from Middle Eastern allies have lessened the demand for gold as a safe-haven asset. Recent U.S. data reveals a decline in Initial Jobless Claims to 198K and strong retail sales growth. This supports the idea that the Federal Reserve will keep interest rates steady. Now, futures markets expect rate cuts around June, although there are ongoing concerns about inflation. As risk sentiment improves, gold’s value declines. Trump has reassured that Fed Chair Jerome Powell will stay in his position despite legal threats. The U.S. Dollar Index, currently around 99.30, is helping to limit gold’s price drop. Technical analysis shows resistance for gold at $4,643 and support near the nine-day Exponential Moving Average at $4,549. Central banks, especially in emerging markets like China and India, added 1,136 tonnes of gold to their reserves in 2022. Gold is a reliable asset during economic uncertainty and tends to move oppositely to the U.S. Dollar and stock markets. Its price is greatly affected by geopolitical risks and interest rate changes. **Factors Affecting Gold Value** With gold close to its all-time high of $4,643, its recent rally is losing momentum. Easing tensions with Iran are diminishing the demand for gold as a safe haven. The Federal Reserve remains cautious, supported by strong economic data from late 2025, suggesting that high interest rates will keep gold less appealing. In the fourth quarter of 2025, we observed robust retail sales and a strong job market, with jobless claims hitting 198,000. This economic strength has pushed expectations for interest rate cuts to at least June. Central banks continued to buy gold, exceeding 1,000 metric tons for the second consecutive year, but this demand may already be reflected in the current price. Inflation trends also point to a careful Fed, which isn’t great news for gold. Core inflation held steady at a four-year low of 2.6%, while headline inflation stuck at 2.7%. Historically, aggressive Fed rate hikes have ended major gold bull markets, and a similar scenario could happen if inflation remains high. In daily charts, gold is forming an ascending wedge pattern, which may indicate a price drop. If it breaks below the current lower trendline near $4,520, it could lead to a significant sell-off, with a major downside target at the 50-day moving average around $4,313. Given this situation, investors might want to consider strategies to profit from a potential decline in gold prices. Buying put options with strike prices below $4,500 can provide a way to bet on a fall with limited risk. Alternatively, selling call options or setting up bear call spreads above the recent high of $4,643 could capture diminishing upward momentum. We should also keep an eye on the U.S. Dollar Index, currently around 99.30. Though it has displayed slight weakness, signs of a strengthening dollar due to the Fed’s cautious approach could exert additional downward pressure on gold. The dollar’s performance will be crucial in the upcoming weeks. Create your live VT Markets account and start trading now.

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