Gold Corrects After 4-Day Rally, Tariff and Iran Uncertainty Remain Supportive
Gold prices weakened after posting four consecutive days of gains, a rally previously supported by uncertainty over US trade policy and escalating tensions in the Middle East. Despite a sharp intraday decline, gold's decline was later pared as the US dollar weakened slightly, preventing pressure on the precious metal from developing into a sustained sell-off.
In the latest session, gold corrected by around 2.5% before paring its losses. In the previous four sessions, gold had risen more than 7% as investors returned to safe-haven assets, particularly after the US Supreme Court ruling shook up President Donald Trump's tariff regime and the market monitored developments in the US-Iran confrontation.
Several market participants considered the substantial price fluctuations to be "normal" given the current volatility. However, medium-term sentiment is considered positive because uncertainty regarding Iran has not abated and the US tariff policy has the potential to widen trade frictions—two factors that typically keep defensive demand alive.
Market confusion primarily centers on the direction of US tariffs. Following the court ruling, Trump announced he would raise global import duties to 15%. At the same time, the previously announced 10% import tariff policy took effect on Tuesday, while the implementation schedule for the higher tariffs remains uncertain. This situation has businesses and trading partner countries recalculating the policy's impact, including the possibility of conflicts with existing agreements.
On the other hand, some analysts believe that the tariff headlines do maintain high uncertainty and tend to support gold "at the margin," but not enough to trigger a decisive breakout. With real yields remaining relatively strong and the dollar not yet significantly weakening, gold is more likely to move in a short-term consolidation rather than forming an aggressive trend without a new catalyst.
Gold is also considered to be starting to regain its footing above $5,000 per ounce after its previous extreme movement. At the turn of the month, a surge in speculative activity briefly pushed the multi-year rally to a fragile point, and prices then reversed sharply from a record high above $5,595 in late January. Since then, gold has recovered more than half of the correction, although volatility remains high and daily movements tend to be choppy.
Several major banks maintain the view that gold prices still have the potential to recover, as the fundamental pillars of the rally remain unchanged: geopolitical risks—particularly in the Middle East—concerns about the Fed's independence, and the tendency of some investors to shift portfolios away from government bonds and major currencies and toward hedge assets. UBS, for example, believes geopolitical events can trigger a surge in volatility, which typically increases hedging demand, and projects gold could potentially reach $6,200 per ounce in the coming months.
Geopolitically, the market is awaiting the continuation of the US-Iran nuclear talks this week, amidst the buildup of US military strength in the region. Trump has emphasized his preference for a diplomatic solution but has warned of serious consequences if a deal is not reached—a combination that has kept safe-haven demand relevant despite gold's correction. At the close of the New York session, gold was down around 1.2% to $5,164.61 per ounce, while silver fell 1.0% to $87.30, and the US dollar edged higher.
Source: Newsmaker.id
