25.03.202614:02 Forex Analysis & Reviews: Gold takes on risk

Since the outbreak of the Middle East conflict, gold has been moving in tandem with US stock indices and inversely to oil. So, the fall in Brent and WTI on reports of talks between the US and Iran allowed XAU/USD bulls to counterattack after one of the largest sell-offs in recent years. Donald Trump says Tehran has prepared him a gift — he didn't specify what it is. Investors hope the "present" is related to the Strait of Hormuz.

Gold price dynamics in absolute and percentage terms

Gold's inverse correlation with oil has been driven by fears that surging Brent above $100 per barrel will accelerate inflation. The metal has long ceased to be a reliable inflation hedge. It fell in 2022 when consumer prices reached four-decade highs. The main reason then, as now, was the prospect of central banks led by the Fed tightening policy. Those fears have repeatedly forced XAU/USD bulls to flee the field.

If oil prices fall, the spike in inflation will prove temporary. The Fed will return to the idea of easing, which would weaken the dollar and push down Treasury yields — creating an ideal environment for gold to rise.

But gold is no longer a sanctuary. It is not acting as a safe haven during the Middle East conflict. Quite the opposite: XAU/USD has been falling along with US stock indices — behaviour more typical of risky assets.

Indeed, gold is being sold to raise cash and meet margin calls on equity and bond positions. But that is not the only reason gold is linked to US stock indices. In 2025, its dynamics had much in common with the Nasdaq Composite in 1999 during the dot-com crisis. Then, as now, that led to a bursting bubble.

Gold vs Nasdaq Composite dynamics

There are similarities and differences between the January and March sell?offs in XAU/USD. In both cases, a disappointed crowd, frustrated by gold's inability to push higher, participated in selling. But this spring, central banks in emerging markets joined them, offloading bullion to boost reserves to combat the fallout from very high oil prices.

The further fate of the metal will depend on the course of US–Iran negotiations. De-escalation will lift equity indices and push Brent lower — a clear positive for XAU/USD.

Technically, the daily chart shows the completion of both a parent and a sub 1-2-3 reversal pattern. As a result, prices fell to the pivot level at $4,100. A rebound and activation of an inner bar restored initiative to the bulls. As long as gold trades above $4,525, the emphasis should be on buying.