A temporary diplomatic reprieve has provided some support for gold prices, which had been under significant downward pressure. The catalyst was a decision by U.S. President Trump to extend an ultimatum concerning potential strikes on Iranian energy assets until April 6. This move prompted initial buying interest from investors on Friday, following a steep decline of approximately 22 percent from the record highs seen in late January.
Technical Positioning and Critical Levels
From a chart perspective, gold is currently consolidating within a range between $4,400 and $4,500 per ounce. Market analysts suggest that a sustained breakout above $4,600 would serve as the first signal of a potential trend reversal. A crucial support zone is seen around $4,100, which aligns with the 200-day moving average. With a daily gain of 2.51 percent to $4,487, the precious metal has at least reclaimed the middle of its recent trading band. The sustainability of this move will face a key test by April 6, when the extended U.S. ultimatum expires.
Middle East Tensions: A Pause, Not a Resolution
While the postponement of planned military action has eased immediate selling pressure, underlying uncertainty remains firmly in place. Iranian Revolutionary Guards continue to enforce a closure of the Strait of Hormuz. Meanwhile, reports indicate the Pentagon is preparing to deploy up to 10,000 additional troops to the region. Demand for physical gold holdings persists, even as futures markets have recently contended with liquidity needs and a robust U.S. dollar.
Should investors sell immediately? Or is it worth buying Gold?
Brent crude oil continues to trade significantly above $100 per barrel, a factor that is fueling inflation expectations. Several Federal Reserve officials explicitly warned on Friday of the risk of a persistent energy price shock, which could anchor longer-term inflation expectations. Market pricing now reflects no anticipated interest rate cuts for 2026, with the probability of further rate hikes estimated at around 35 percent. This environment of high real interest rates presents a fundamental challenge for a non-yielding asset like gold.
Institutional Optimism Contrasts with Macro Headwinds
Despite the complex macroeconomic backdrop, the long-term outlook from several major financial institutions remains bullish. Wells Fargo has characterized the recent price correction as a buying opportunity, setting a price target of $6,100 to $6,300 per ounce by the end of 2026. This represents a potential upside of roughly 43 percent from current levels. The bank cites sustained strong demand from global central banks and an anticipated longer-term weakening in bond yields as primary drivers. Similarly, Goldman Sachs and BMO Capital Markets have recently expressed positive views on gold’s long-term trajectory.
Ad
Gold Stock: Buy or Sell?! New Gold Analysis from March 28 delivers the answer:
The latest Gold figures speak for themselves: Urgent action needed for Gold investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from March 28.
Gold: Buy or sell? Read more here...