Gold Price Outlook: War Risks Remain as Traders Watch US-Iran Tensions and Key Technical Levels
US 10-year Treasury yields resumed their decline, accompanied by a weaker US Dollar, allowing Gold to benefit from the losses in both markets. The precious metal closed higher around the $3,930 zone after briefly slipping to $3,895.
Reports suggesting that the United States and Iran were close to reaching an agreement triggered a sharp decline in oil prices, easing market concerns and initially sending Gold surging toward $3,971.
However, a senior Iranian official subsequently denied the reports through a statement on X (formerly Twitter), sending Gold tumbling to $3,895. The precious metal eventually recovered after US President Donald Trump told the Financial Times that Washington had no immediate plans to attack Iran following the US midterm elections.
Stronger JOLTS Data Provides Support for the US Dollar
Beyond geopolitical developments, the latest US JOLTS report delivered stronger-than-expected results, with job openings reaching 7.523 million compared with market expectations of 7.100 million.
The report was accompanied by positive factory orders data, providing additional support for the US Dollar. However, the market reaction remained relatively limited as investors were more focused on geopolitical developments and the US midterm election voting process.
Economic indicators remain important considerations for the Federal Reserve (Fed), but their immediate market impact could be overshadowed by geopolitical risks and election-related developments.
As a result, traders may temporarily shift their attention toward upcoming US employment data, including Wednesday's ADP private-sector employment report and Friday's closely watched Nonfarm Payrolls (NFP) report.
The market's reaction to economic data could become more apparent once election-related uncertainty subsides. Nevertheless, geopolitical risks are likely to remain in focus through the end of the week.
War Risks Have Not Completely Disappeared
Israeli Prime Minister Benjamin Netanyahu previously suggested that a US attack on Iran could take place after the US midterm elections. The remarks triggered another sharp decline in Gold prices.
However, the precious metal subsequently recovered after Trump sought to ease concerns in an interview with the Financial Times, stating that he had no immediate plans to attack Iran unless necessary. He also claimed that the United States had already achieved its objectives.
Nevertheless, these statements do not necessarily mean that the risk of war has disappeared.
Some observers argue that Trump could be attempting to send a misleading signal to the market to contain oil prices ahead of the election. By avoiding statements that could trigger another surge in crude prices, Washington may be seeking to prevent additional inflationary pressure during a politically sensitive period.
Behind the diplomatic messaging, the US military is reportedly working to position its forces in previously planned locations, potentially allowing operations to resume shortly after the midterm elections.
The New York Times cited US officials as saying that the US military could resume major combat operations against Iran as early as Wednesday.
At least two factors have been highlighted by observers as potentially enabling Washington to launch a short and intensive military campaign, similar to the possibility Trump discussed last week.
First, three US aircraft carriers are currently involved in the broader regional military deployment.
However, one of these carriers is expected to return to its home base in early November.
The USS George H.W. Bush remains on standby in the region, while the USS George Washington has been redeployed from the Pacific to the Middle East. Meanwhile, the USS Theodore Roosevelt was dispatched from San Diego in late September to reinforce US military forces.
The USS Theodore Roosevelt may soon need to depart and return to its operational area near Japan.
Second, early November coincides with a period of moonless nights.
Reports suggest that the resulting darkness could provide conditions preferred by military forces when planning and conducting potential operations.
Given these developments, traders should remain flexible and be prepared to adjust their trading strategies according to changes in the geopolitical situation.
Two Potential Gold Trading Scenarios
The near-term outlook for Gold remains highly sensitive to developments between Washington and Tehran. Traders should prepare for two possible scenarios:
1. No War or Further Military Escalation
This scenario would represent a calmer market environment, potentially reducing geopolitical risk premiums and easing concerns about energy-driven inflation.
Potential Gold reaction:
Gold could resume its upward movement toward $3,970.
A breakout above $4,000 could open the way toward the next resistance at $4,037.
Further bullish momentum could potentially push prices above $4,082.
Trading strategy: Maintain the BUY scenario as long as bullish momentum remains intact.
2. The US Launches an Attack on Iran and the Conflict Escalates
Trump could potentially authorize military action without providing advance signals to financial markets. Such an unexpected development could trigger significant volatility and rapid repositioning across financial assets.
Potential Gold reaction:
Gold could reverse sharply and come under renewed selling pressure.
The $3,870–$3,886 support zone could be broken.
The next downside targets would be around $3,700–$3,720.
In an extreme scenario, Gold could extend its decline toward the $3,500–$3,550 region.
Trading strategy: Be prepared to switch to SELL if military escalation triggers a confirmed bearish reversal.
Gold Technical Analysis
The daily Gold candlestick closed bearish, resembling a Hanging Man pattern, after the recovery was rejected around the $3,970–$3,971 resistance zone for the second consecutive session.
From a technical perspective, this pattern suggests that downside risks remain present following the repeated failure to break higher.
However, the psychological support area between $3,870 and $3,886 has continued to hold, preventing a deeper correction so far.
Consequently, the technical outlook presents two important conditions:
Bearish scenario: A decisive break below $3,870 could strengthen selling pressure and expose Gold to further downside targets.
Bullish scenario: A successful breakout above $3,970–$3,971 could strengthen the recovery and open the way for another upward move.
Gold Outlook: Geopolitics Remains the Main Market Driver
Geopolitical risks have not completely disappeared, while the US midterm election results are still undergoing the vote-counting process.
Nevertheless, Trump's statement that the United States has no immediate plans to attack Iran has helped calm financial markets. This development has also been relatively supportive for Gold, as concerns about potential energy-driven inflation have eased for the time being.
However, geopolitical developments may not necessarily provide direct support for Gold in every scenario. Their impact will depend on how investors interpret the consequences for oil prices, inflation expectations, Treasury yields, and Federal Reserve policy.
For now, traders should closely monitor the $3,870–$3,886 support zone and the $3,970–$3,971 resistance area while remaining alert to sudden headlines from the US-Iran conflict.