Gold prices remain near $4,600 amid reduced demand as tensions with Iran ease. Trump’s indication of delayed military action and calls for restraint further diminished the safe-haven appeal of gold, causing it to trade around $4,590.
The precious metal’s decline is influenced by US Labour data, with Jobless Claims falling to 198,000, suggesting a strong labour market. Expectations now imply the Federal Reserve will maintain interest rates, bolstering the US dollar’s potential.
US Economic Data and Inflation Concerns
The US Census Bureau’s data showed Retail Sales increased to $735.9 billion in November, surpassing expectations. Meanwhile, the Producer Price Index recorded a 3% year-over-year increase, indicating potential inflationary pressures.
Fed’s Beige Book reported modest economic improvement since mid-November. US Core CPI rose by 0.2% in December, maintaining an annual core inflation rate of 2.6%.
Technically, gold trades within an ascending wedge, with resistance at $4,643 and support around $4,520. A bearish reversal is possible if prices fall below the trendline with strong volume.
“Risk-on” markets see currencies like the Aussie and Canadian dollars strengthen, while “risk-off” conditions favour the US dollar, Japanese yen, and Swiss franc. These shifts reflect fluctuating demand for commodities and safe-haven assets.
Gold Market Trends and Strategies
With gold pulling back from its recent high near $4,643, traders should view this as a potential shift in momentum. The easing of geopolitical tensions in the Middle East is reducing demand for safe-haven assets, creating an opportunity to bet on further price drops. This could involve buying put options or establishing short futures positions, anticipating a deeper correction.
The strong US economy provides a solid reason for this bearish outlook. Looking back, we saw remarkable resilience in the labor market throughout 2025, which consistently added over 200,000 jobs per month despite high borrowing costs. With the latest jobless claims coming in at a low 198K, the Federal Reserve has little incentive to cut interest rates before June, keeping pressure on non-yielding gold.
This “higher for longer” interest rate environment makes strategies like selling covered calls on gold ETFs attractive for generating income. The cost of holding physical gold remains high, and as the market digests that rate cuts are not imminent, the price is likely to drift downward. Options pricing may not yet fully reflect this sustained headwind, offering a potential edge for traders acting now.
The technical chart points to an ascending wedge pattern, a classic sign of fading upward momentum. We saw a similar period of consolidation after the major price rally in 2020, so a significant pullback here would follow historical precedent. A break below the $4,520 support level should be seen as a strong confirmation signal to initiate or add to bearish positions, with a potential target near the 50-day average around $4,313.
We must also watch the broader “risk-on” sentiment, which we saw gain traction through 2025 as the S&P 500 posted gains of over 20%. This rotation of money out of safe havens and into equities is likely to continue, especially if the US Dollar Index strengthens back toward the 100 mark. This flow of capital away from gold could accelerate its decline in the coming weeks.
