Gold (XAU/USD) rose 0.6% to near $5,200 in European trading on Wednesday. Demand increased amid US-Iran tensions and uncertainty about US trade policy after a US Supreme Court decision.
Nuclear talks between the US and Iran are scheduled for Thursday. US President Donald Trump warned on Monday that military action could follow if Tehran does not drop its nuclear programme plans.
Geopolitical Risk And Trade Policy Uncertainty
In the US, the Supreme Court ruled against additional duties and said Trump exceeded his authority by using economic emergency powers. Trump then announced 10% global tariffs, which could rise to 15%, and warned of higher tariffs if countries do not honour trade deals.
Technically, gold remains above a rising support line from about $4,400 and above the 20-day EMA near $5,010. The 14-day RSI is around 60.00, with support near $5,120, then $5,010, $4,880 and $4,750, and resistance near $5,240 and $5,380.
Central banks added 1,136 tonnes of gold worth about $70 billion in 2022, the highest annual purchase on record. Gold often moves inversely to the US Dollar, US Treasuries, and risk assets, and can react to rates and geopolitical stress.
The current market is being driven by geopolitical risk and trade policy uncertainty, creating a strong floor under the gold price near $5,200. These dual threats are fueling demand for safe-haven assets, with a key catalyst being the upcoming US-Iran talks. Any escalation in rhetoric from that meeting will likely add to market volatility.
Central Bank Demand And Macro Drivers
We have seen this pattern strengthen over the past few years, especially with central banks continuing their aggressive purchasing. After record gold buying in 2022 and 2023, central banks globally added another 980 tonnes in 2025, signaling a deep-seated distrust in fiat currencies. The memory of stubbornly high inflation through 2024 also keeps institutional demand for hard assets robust.
For traders, the clear uptrend suggests using options to manage risk while maintaining bullish exposure. Buying call options or bull call spreads can capitalize on a potential move towards the $5,380 target mentioned in technical forecasts. The support line around $5,120 and the moving average near $5,010 are critical levels to watch for structuring these trades.
The options market is reflecting this tension, with implied volatility on gold futures rising ahead of the geopolitical deadlines. We are seeing significant open interest building in out-of-the-money calls, particularly for strikes above $5,300 expiring in the next quarter. This indicates that market participants are positioning for a sharp upward move rather than a decline.
This price action is also supported by recent weakness in the US Dollar, which has been choppy since the Supreme Court ruling upended trade policy. Historically, a volatile or weakening dollar provides a direct tailwind for gold. Traders should watch the Dollar Index closely, as a sustained break below its recent lows would likely clear the path for gold to test its recent peak of $5,240 and beyond.
