Gold climbed to its highest level in three months on Monday, touching $4,681, after the US Treasury announced what it called “unprecedented” economic measures against Iran. The move, which targets nearly 60 entities linked to the Islamic Revolutionary Guard Corps, has revived demand for safe-haven assets. At the time of writing, the spot price stood at $4,631, up 0.62% on the day.
Sanctions on Iran spark haven buying
US Treasury Secretary Scott Bessent unveiled the sanctions, which focus on what he described as Tehran’s “most vital lifelines,” including digital assets, technology, gold, aviation and shipping. The operation, named ‘Outcast,’ targets a network of broker companies and shadow fleet vessels across the UAE, Hong Kong, China, Singapore, Switzerland and Europe. Bessent said the actions aim to cut off revenue sources for the Islamic Revolutionary Guard Corps, and that President Donald Trump is urging world leaders to sever economic ties with Iran.
Geopolitical tensions in the Middle East have historically boosted gold’s appeal as a store of value. The latest developments are no exception, with the precious metal regaining its footing after a recent consolidation phase.
Market reaction: yields dip, dollar holds firm
US Treasury yields edged lower after Bessent’s announcement: the 10-year note yield fell 3.5 basis points to 4.700%. Lower yields reduce the opportunity cost of holding non-yielding bullion, which helped support the price. Meanwhile, the US Dollar Index, which tracks the greenback against six major currencies, rose 0.22% to 99.05, recovering from three-month lows. The dollar’s strength typically weighs on gold, but the haven bid proved stronger on this occasion.
From a technical perspective, gold broke above the 200-day simple moving average (SMA) at $4,516 last Friday, a bullish signal. It has since reclaimed the May 29 high of $4,595, clearing the way toward $4,600. The relative strength index (RSI) has entered overbought territory above 70, but during strong uptrends the RSI can remain elevated above 80-85 before a reversal. The first resistance is at $4,700, followed by the May 7 swing high of $4,764. A break above that opens the door to $4,800 and eventually $5,000. On the downside, the 200-day SMA at $4,516 is the first support, with $4,500 and the 100-day SMA at $4,379 further below.
ETF inflows surge ahead of Jackson Hole
The World Gold Council reported that physically backed gold exchange-traded funds (ETFs) attracted 46.7 million tonnes of inflows last week, worth $6.4 billion — the largest weekly increase in ten months. The buying was led by North American and European-listed funds, reflecting renewed investor appetite for the metal.
Market participants are now looking ahead to the Jackson Hole symposium, where new Federal Reserve Chair Kevin Warsh is scheduled to speak on Friday. The Fed’s policy stance is a key driver for gold, as interest rate expectations influence both the dollar and bond yields. Traders will also be watching US growth, inflation and jobs data due this week.
Key takeaways
- Gold touched a three-month high of $4,681 after US Treasury announced sanctions on Iran-linked entities.
- The sanctions target nearly 60 entities, including broker networks and shadow fleet vessels across multiple countries.
- Gold ETF inflows reached a 10-month high, with $6.4 billion added last week.
- Technical resistance stands at $4,700, then $4,764; support at the 200-day SMA ($4,516).
Common questions
What caused the gold rally on Monday?
The rally was driven by US Treasury Secretary Scott Bessent’s announcement of “unprecedented” sanctions on Iran-linked entities, which heightened geopolitical tensions and boosted demand for safe-haven assets such as gold.
What are the key technical levels for gold?
Immediate resistance is at $4,700, then the May 7 high of $4,764. On the downside, the 200-day simple moving average at $4,516 is the first support, followed by $4,500 and the 100-day SMA at $4,379.
Gold’s role as a safe-haven asset and its inverse relationship with the dollar and bond yields remain central to its price dynamics. For the latest price, follow the live gold price on GoldRate.info.