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Gold's Upward Momentum Is Constrained by a Strong Dollar, with US$5,300 Potentially Serving as a Watershed for Risk Pricing
Summary:
Although gold prices rose again on Tuesday, gains were capped by a strong dollar. A break above US$5,300 could signal the start of a new phase in risk pricing.
CLOSED
5093.95
ENTRY
5753.00
TGT
4960.00
SL
5151.78 +11.28 +0.22%
2659
Points
Profit
4960.00
SL
5120.54
CLOSING
5093.95
ENTRY
5753.00
TGT
Fundamentals
Against the backdrop of escalating tensions in the Middle East, risk aversion sentiment has intensified significantly. Particularly as U.S.-Iran tensions show no signs of easing, rising crude oil prices have amplified inflation expectations, accelerating capital inflows into traditional safe-haven assets like gold and driving its price upward amid volatility. As long as geopolitical risks remain inadequately priced, gold—as a core asset for hedging against uncertainty—will continue to see robust demand for allocation.
However, the rise in gold prices has not been without resistance. A strengthening U.S. dollar index has increased the cost of dollar-denominated gold for overseas buyers, objectively curbing further buying interest. Simultaneously, market concerns persist that the conflict may transmit through energy channels to the inflation front, potentially forcing the Federal Reserve to adopt a more hawkish policy stance. Amid rising expectations for interest rate hikes, the upward trend in real interest rates exerts downward pressure on non-interest-bearing assets like gold. This dynamic led to pressure on gold prices during the previous trading session, triggering technical selling.
The core variables in the current market hinge on the duration and magnitude of risk premiums. With no clear consensus yet on the trajectory of the conflict and its spillover effects on the global economy, volatility in risk assets remains elevated, and demand for safe-haven assets shows no signs of cooling rapidly. Should gold prices effectively breach the US$5,300 threshold, it could signal that global assets are entering a new phase of risk reassessment—where geopolitical risks, energy inflation, and policy uncertainties are systematically incorporated into pricing frameworks.
Technical Analysis
From a technical perspective, the US$5,300 level holds significant importance as a key pivot point. Should prices firmly hold above this level, trend-following capital may increase positions, propelling gold toward the US$5,400 zone. Conversely, if geopolitical tensions rapidly ease and risk premiums retreat, gold could retest levels below US$5,200. However, given the persistent uncertainty surrounding inflation trajectories and interest rate outlooks, any significant pullback is likely to attract bargain-hunting buyers.
Looking ahead, market volatility is likely to intensify significantly around the time of the Federal Reserve's interest rate decision. While the strong US dollar may continue to cap gold's upside potential in the near term, the overall trend for gold remains bullish amid fragile global risk appetite, elevated energy prices, and uncertainty surrounding policy paths. Within the current macroeconomic framework, gold serves not only as a safe-haven asset but also as a key barometer for gauging anxiety levels across global markets.
Trading Recommendations
Trading Direction: Buy
Entry Price: 5100
Target Price: 5753
Stop Loss: 4960
Valid Until: April 2, 2026 23:55:00
Support: 5221, 5201, 5186
Resistance: 5250, 5260, 5286
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You understand and acknowledge that there is a high degree of risk involved in trading with strategies. Following any strategies or investment methodologies is the potential for loss. The content on the site is being provided by our contributors and analysts for information purposes only. You alone are solely responsible for determining whether any trading assets, or securities, or strategy, or any other product is suitable for you based on your investment objectives and financial situation.
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Master of Economics, 8 years in the financial industry, CFA holder, joined HSBC (Hong Kong) Bank in 2013 after graduating from the University of California, USA in the Investment Research and Markets Department. With years of financial market experience and trading experience, having provided excellent investment advice to many brokerages, entity derivatives importers and clients in Greater China.
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