On analyzing the movements of the gold futures in different time charts since last week amid a growing escalation of the Israel-Iran war that turned uglier with the US strike on Iran’s nuclear facilities on the weekend that triggered safe-haven demand, I anticipate that the changing safe-haven preferences have shifted the investors from gold to other haven options.
On Monday, gold futures reacted inversely, with a sharp downward move, while the US dollar found a reversal as safe-haven buyers pivoted to the dollar after the U.S. involvement in the Middle East conflict.
Undoubtedly, gold futures are under selling pressure due to the strengthening dollar. Investors are still awaiting Iranian retaliatory measures. Iran could also block the Strait of Hormuz, a key shipping channel, and conduct air strikes on the U.S. if this conflict escalates further. I anticipate that the probability of settling this dispute with discussions ended after the US strike on the Iranian nuclear facilities.
I anticipate a sharp rise in fears of Iranian retaliation, adding to concerns that high energy prices could underpin global inflation, keeping the interest rates high for longer, which will raise the cost of holding gold, a non-yielding asset at such a high price level.
Undoubtedly, the dollar benefited from these bets, having already made modest gains last week after the Federal Reserve stuck a largely non-committal stance towards any future rate cuts as the price action seems to be muted in response to the escalating Middle East conflict has kept the investor to wait and watch the quantum of Iran’s retaliatory move now.
I anticipate that the gold price action in response to the escalating Middle East conflict will define the long-term direction as there are more worries about the positive inflationary impact of the Middle East conflict than the negative economic impact as the currency markets will be at the mercy of comments and action from the Iranian, Israeli, and U.S. government which confirms further upside in the haven currencies if the parties escalate the conflict further.
On the other hand, any further escalation of this conflict could lead to the possible advent of World War III if Russia and China join this conflict in support of Iran.
Undoubtedly, this phenomenon could lead the world’s superpowers to calm down this fear as the United Nations is likely to lead this action shortly, as no one wants to escalate this issue further.
I anticipate that the positive development to eliminate this conflict will attract gold bears to load fresh shorts at the current levels this week as the technical charts define a bearish picture for gold futures to remain bearish both in short and longer term as the exhaustion seen on Monday’s opening despite a sudden surge in Middle East tension with involvement of the US confirms that the gold has already lost its haven potential at the current levels while the current circumstances raised the haven potential of US Dollar, USD/JPY and USD/CHF.
Technical Levels to Watch
In the hourly chart, gold futures have been trading below the significant support at the 200 DMA at $3399 since Jun. 19, 2025, while the formations of bearish crossovers with piercing of the 200 DMA with downward moves by 9, 20, and 50 DMAs have pushed the gold futures even below the 9 DMA.
Secondly, the 100 DMA has also pierced the 200 DMA with a downward move this week, which confirms a sizable bearish pressure to remain and could push the gold futures below the immediate support at $3357 in today’s session which will confirm the continuity of this slide in gold futures this week.
In the daily chart, gold futures are trying to hold the immediate support at the 20 DMA at $3372. Here, a breakdown could push the gold futures below the second support at the 50 DMA at $3334, which is likely to be tested shortly if the pace of exhaustion remains as it is.
In the weekly chart, gold futures are in a sliding channel after testing a recent peak at $3476 last week forming a bearish candle; and this week’s bearish candle has started its formation even on the first trading session of this week that could pierce the immediate support at 9 DMA at $3342 shortly as a breakdown below the significant support at $3357 will confirm the quantum of this selling spree.
Disclaimer: Readers are advised to take a position in gold and other safe-haven potential currencies at their own risk as this analysis is based only on observations.