Trump issues a "shocking" warning to Iran! Gold prices rise nearly $18. How to trade next

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On Monday (March 30), spot gold prices closed higher. Against the backdrop of the Middle East conflict showing no clear signs of cooling down for a long time and the market re-evaluating the Federal Reserve’s rate path, safe-haven demand pushed up gold prices, but a strong U.S. dollar and expectations that “high interest rates will be maintained for longer” limited the upside room for gold’s rebound.

Spot gold closed up $17.75 on Monday, a gain of 0.4%, at $4,510.68 per ounce; during the European session, gold prices briefly touched a high of $4,580.68 per ounce.

Jim Wyckoff, a senior analyst at Kitco Metals, said: “The war is still raging and there are no signs of the conflict being resolved, which boosts safe-haven demand and in turn drives up gold prices. In the near term, market focus will center on the war, oil prices, U.S. Treasury yields, and the U.S. Dollar Index.”

U.S. President Trump said on Monday that unless Iran opens the Strait of Hormuz, Iran’s power plants and oil wells will be destroyed. Before that, Tehran said the U.S.’s peace proposal is unrealistic and fired multiple ballistic missiles at Israel.

Since March, gold prices have fallen by more than 14%. They are expected to post the worst monthly performance since 2008, mainly because a surge in energy prices has intensified inflation concerns and prompted the market to reassess rate expectations.

Federal Reserve Chair Jerome Powell said on Monday that the Federal Reserve can wait and observe the impact of the war in Iran on the economy and inflation. Earlier this month, the Federal Reserve kept the target range for its benchmark interest rate unchanged at 3.50%-3.75%.

The United States will release a series of key economic data this week, including job openings, retail sales, the ADP employment report, and nonfarm payroll employment data.

Fawad Razaqzada, a market analyst at City Index and FOREX.com, said that the $4,700 to $4,750 per ounce range appears to be the test level for a short-term rebound in gold prices: “If gold cannot break above this range, this rebound may fade gradually, just like the other rebounds we’ve seen recently.”

Trump issues a “complete destruction” warning to Iran

In terms of geopolitics, the fighting in the Middle East has yet to show solid signals of cooling. As of now, the conflict between the U.S. and Israel and Iran has entered its fifth week, and attacks in the region are continuing to spread.

Over the weekend, Iran-backed Houthi militants in Yemen launched missile attacks on Israel, adding another front to a conflict that had already lasted for weeks. At the same time, the market is also concerned that shipping in the Red Sea and the Gulf of Aden may face greater risks, while oil transportation through the Strait of Hormuz is still disrupted.

Trump’s latest remarks further heighten market concerns about the situation escalating. On Monday, Trump said on social media that if Iran cannot reach an agreement with the United States soon, the U.S. will begin bombing key infrastructure.

Trump later also warned that if negotiations break down and shipping through the Strait of Hormuz cannot be restored, the U.S. will “completely destroy” key targets including Iran’s power facilities and oil wells, as well as Hark Island.

According to a report by the British Financial Times, in an interview Trump said his preferred option on the Iran issue is to “take the oil,” and said the U.S. could seize Iran’s important export hub, Hark Island.

Hark Island is Iran’s most critical crude oil export hub, accounting for the vast majority of the country’s crude oil exports, and is therefore seen by the market as the lifeline of Iran’s energy sector.

Gold Technical Analysis

FXStreet analyst Christian Borjon Valencia noted that on Monday, as falling U.S. Treasury yields offset the broad-based strength of the dollar, gold prices moved higher. The U.S. Dollar Index (DXY), which measures the performance of the dollar against six major currencies, rose 0.29% to 100.48. The yield on U.S. 10-year Treasury notes fell by nearly 9 basis points to 4.34%.

Valencia said that the technical picture shows gold is consolidating sideways in the absence of clear catalysts, which may open the door for a decisive breakout of the key resistance level—the 100-day simple moving average (SMA) at $4,610 per ounce. The Relative Strength Index (RSI) shows that sellers are still in the lead, but as the index approaches the neutral level of 50, buyers are starting to show.

Valencia said that if gold breaks above the 100-day SMA, the next area to watch will be the March 20 high at $4,736 per ounce, followed by the 20-day SMA at $4,841 per ounce. If gold strengthens further, the next resistance area will be the 50-day SMA at $4,951 per ounce.

(Spot gold daily chart Source: FXStreet)

Valencia added that, conversely, if gold sharply retraces to below $4,500 per ounce, the first support level will be the February 2 swing low at $4,402 per ounce, followed by the March 24 daily low at $4,305 per ounce; below that, the 200-day SMA at $4,100 per ounce.

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