Iran Conflict

Gold begins the new day on a bullish note following escalating developments in the Middle East. Yesterday, markets were focused on the US–China deal. Although an agreement was reached, tariffs but overall trade tensions remain elevated. Combined with the lower-than-expected core CPI, gold mostly moved sideways, apart from intraday noise. However, this could change in the days ahead. 

US–Iran nuclear negotiations appear to be stalling. A new round of talks is scheduled for Sunday, June 15. The negative newsflow escalated with Iran’s defense minister warned that US bases in the region could be targeted if conflict breaks out. US ordered all non-essential personnel to evacuate and approved the voluntary departure of military family members from the region. Simultaneously, reports surfaced that “Israel is ready to strike Iran.” 

The negative newsflow continued today. The International Atomic Energy Agency passed a resolution declaring Iran non-compliant with its international obligations. In retaliation, Iran announced it would build a new uranium enrichment facility at a hidden and secure location and unveiled plans for new military drills. 

The timing of this escalation raises the risk of direct conflict. Netanyahu’s government is facing collapse, with the possibility of new elections looming. At the same time, Iran is nearing nuclear weapons capability. While Trump is more openly supportive of Israel than Biden, he is reluctant to involve the US in any direct or indirect conflict. This dynamic raises the chances of an Israeli strike on Iran. 

Adding to the tension is the upcoming July 9 deadline for tariffs. Trump intends to send unilateral tariff agreements to trade partners with a “take it or leave it” approach. This could sharply increase trade tensions and further support gold prices. 

(XAUUSD)

The news flow today is heavily bullish for gold and technical outlook supports it. The triangle formation broke and gold retested the upper line of the triangle, got some boost from it. A move towards above 3600 could begin for the medium term if the risks continue as high as today, especially if multiple strikes to Iran happens. 

Despite the heavily bullish outlook, we live in a world that whole market could change in minutes, news that could change the market outlook came every other day. In an environment like this it is crucial to set key levels and indicators to watch for risk management. For the moment, 50-day EMA seems to be working pretty well as support for gold. This moving average could be the final stop that could change the medium term direction for gold and invalidate the bullish outlook.