Gold Outlook: Tug-of-War Continues, Geopolitics and Earnings in Focus

Over the past week, gold has traded with a generally choppy upward bias. However, following the breakdown in U.S.–Iran negotiations, prices have retraced toward the $4,660 area on the downside. Rising inflation concerns have weighed on gold, while expectations of economic slowdown alongside continued central bank gold purchases have provided a floor. 

Looking ahead, geopolitical developments remain the key driver of gold price action. Market participants will closely monitor whether negotiations between the involved parties resume, as well as developments surrounding the transit of the Strait of Hormuz. In addition, U.S. equity earnings season may indirectly influence gold through shifts in broader risk sentiment. 

Technical Observation: Gap Lower Finds Support, Range Structure Remains Intact 

From the XAUUSD daily chart, bulls pushed the price center higher last week. Prices briefly broke above $4,800 mid-week and tested the $4,850 level, but failed to sustain gains above it.

At the start of the week, gold opened with a gap lower of around 1.9%, but found support at the $4,660 level before gradually recovering intraday losses. If buying momentum continues, resistance remains at $4,800, followed by the $4,850–$4,900 region.

On the downside, a break below $4,660 would bring $4,600 and $4,550 into focus as the next support levels.

Overall, gold is likely to remain in a consolidation range between $4,600 and $4,850 until a meaningful geopolitical catalyst emerges to define direction.

Negotiation Breakdown Weighs on Gold, Inflation Concerns Cap Upside

The primary catalyst behind the recent loss of upward momentum in gold is the reversal in geopolitical expectations combined with renewed inflation pressures.

The breakdown of weekend talks between the U.S. and Iran effectively disrupted prior market positioning that had been pricing in de-escalation. During discussions in Islamabad, both sides remained divided over key issues including the dismantling of Iran’s nuclear facilities and control over the Strait of Hormuz.

Subsequently, Trump indicated plans to move forward with actions related to the Strait of Hormuz, while also deploying additional mine-sweeping vessels, while Iran responded with explicit threats of retaliation.

This ongoing escalation has lifted geopolitical risk premiums, which in turn has been transmitted rapidly into inflation expectations via the energy supply channel.

More importantly, this impact is already visible in hard data. U.S. CPI for March rose sharply by 0.9% month-on-month, significantly above the prior 0.3%, marking the largest monthly increase since June 2022. Notably, gasoline prices recorded their strongest increase since 1967.

Although core inflation remains relatively contained for now, the risk of second-round effects is building amid sustained geopolitical tensions. Markets are increasingly re-pricing a “higher-for-longer” interest rate path, which presents a clear headwind for gold.

As a result, whether through disrupted negotiations or stronger inflation prints, both factors reinforce the same narrative: under an entrenched hawkish rate regime, gold—being a non-yielding asset—faces limited upside in the near term.

Demand Shock and Central Bank Buying Provide Downside Support

Despite recurring geopolitical shocks, gold has not experienced a sustained downside move. Price resilience is largely driven by growth slowdown re-pricing on the demand side, as well as structural support from ongoing central bank purchases.

As the duration of the shock extends, energy prices are increasingly seen not as a short-term disruption but as a persistent input cost pressure. Alongside concerns over elevated inflation, markets are reassessing the impact on real income and consumption.

In this process, the dominant narrative may gradually shift from “inflation risks” toward “slowing growth and even recession risk.”

If markets transition further into a growth-risk-driven framework, equities and credit markets are likely to reflect tightening financial conditions. Expectations around the Federal Reserve’s policy path may also shift—from a one-sided hawkish outlook to a dual-phase view of “near-term caution, but medium-term easing capacity.”

In such a scenario, gold’s role as a risk hedge could be reactivated. Although this remains an early-stage development, tail risks alone are already providing support to prices.

From a longer-term perspective, de-dollarization trends continue to underpin central bank demand for gold. The People’s Bank of China has now added gold for 17 consecutive months, recording its largest monthly purchase in over a year. This structural demand provides a stable foundation for prices beyond geopolitical noise.

Focus on Negotiation Resumption and Earnings Season 

Overall, gold is likely to remain in a broad consolidation phase in the near term, with the $4,600 and $4,850 levels serving as key reference points. The combination of failed negotiations and rising inflation has capped upside potential, while economic slowdown expectations and central bank demand continue to provide support.

Geopolitical developments remain the dominant variable for gold. While no clear timeline has been set for the next round of talks, both sides continue to signal openness to diplomatic resolution. A resumption of negotiations with tangible progress could ease inflation expectations and provide a near-term boost to gold.

Conversely, if no meaningful progress is seen this week, geopolitical tensions may remain elevated, keeping gold in a volatile consolidation phase.

At the same time, given gold’s increasingly risk-asset-like behavior during this cycle, U.S. earnings season may also have an indirect impact via risk sentiment.

For banks, if earnings reflect weaker loan demand and deteriorating credit quality, and if trading and investment banking revenues are insufficient to offset the weakness, broader equity sentiment could come under pressure—potentially feeding through to gold.

All in all, markets are likely to remain highly volatile in the week ahead, with discipline in timing and risk management becoming increasingly important.