Gold fell below $5,100 on Thursday, giving up the prior day’s gains as higher US Treasury yields and a stronger US Dollar weighed on prices. XAU/USD traded at $5,069, down more than 1.35%. The US Dollar Index rose over 0.50% to 99.27. Middle East conflict continued into a sixth day, with Israel planning to target Iran’s underground missile sites.

Market Drivers And Geopolitical Risk

Shipping attacks continued, adding two ships to the previously attacked seven. Iran said it would retaliate after a US submarine torpedoed a warship, killing more than 80 sailors. US Initial Jobless Claims for the week ending 28 February were 213K versus 215K expected. Challenger, Gray & Christmas reported announced layoffs of 48.3K in February, down 55% from January. The Fed’s Beige Book noted optimistic expectations, with most districts seeing slight to moderate growth. Seven of 12 districts reported no change in hiring in recent weeks. The Trump administration submitted Kevin Warsh’s nomination to replace Jerome Powell, whose term ends in mid-May. February Nonfarm Payrolls are expected at 59K, with unemployment seen steady at 4.3%. Money markets priced 35 basis points of Fed easing by year-end. Technical levels include support at $5,050, $5,000, $4,950, $4,841 and the 50-day SMA near $4,810, with resistance at $5,100, $5,206, $5,249 and $5,300.

Technical Levels And Positioning

Central banks added 1,136 tonnes of gold worth around $70 billion in 2022. We remember looking at this situation in early 2025, where a strong US economy was battling geopolitical risks for control over gold’s direction. Ultimately, the robust jobs data and a strengthening dollar proved more powerful, putting a cap on any rally. This dynamic set the stage for the rest of that year and has continued into today. That trend has largely held into 2026, with the Federal Reserve, now under Chair Kevin Warsh, maintaining a hawkish stance due to persistent economic strength. The most recent jobs report for January 2026 showed a solid 255,000 jobs were added, keeping the unemployment rate low at 3.9%. This resilience has kept the US Dollar Index firm, currently trading around 104.50. For us traders, this means puts or short-dated futures look attractive as gold is now trading below the critical $5,000 level, sitting near $4,980 today. The failure to hold that psychological support last month has shifted momentum firmly to the downside. The next major target we are watching is the old cycle low from February 2025, around $4,841. However, we must watch for any signs of economic weakness or a spike in inflation, which remains sticky at 3.2% year-over-year as of January. Any surprise weakness in the upcoming February Nonfarm Payrolls report could cause a rapid repricing of Fed expectations. This would weaken the dollar and could trigger a short squeeze in gold, making long call options a viable hedge. While the specific Middle East tensions from early 2025 have since de-escalated, the overall global landscape remains unstable. The safe-haven premium for gold has eroded, but any new flare-up could bring it back quickly. We are therefore maintaining a small portion of our portfolio in longer-dated call options as a tail-risk hedge against unforeseen events. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account