Is it a rebound or a trap? After a brutal decline on Thursday, gold prices experienced a technical rebound.

Source: Huitong Network

Huitong Finance APP News—As we enter the end of March 2026, global investors’ attention remains firmly fixed on the fighting in the Persian Gulf. On Friday, after suffering a brutal drop on Thursday, gold prices staged a technical rebound. This bounce looks more like a “natural correction after a big selloff” than a reversal of the trend.

Looking back at this week, gold bulls and bears have been repeatedly tugging back and forth between “safe-haven demand” and “negative pressure from inflation.” Statements by U.S. President Trump on social media temporarily acted like a shock absorber for the tense situation. He announced that the deadline for U.S. strikes on Iran’s energy would be postponed by 10 days, extending it to April 6, 2026, and revealed that both the U.S. and Iran are in contact. However, this “10-day agreement” has not truly eased market worries.

In contrast is the cold, hard readiness data from the Pentagon. As disclosed by The Wall Street Journal, the U.S. military is considering sending up to 10,000 additional troops to the region, and it is even exploring the possibility of using ground forces to seize Halk Island, Iran’s strategic oil hub. Iran countered with restrictive actions in the Strait of Hormuz: three ships of different nationalities were blocked from transiting, and even a Chinese container ship was forced to turn back due to concerns about route safety. This blockade of the world’s energy lifeline directly pushed up oil prices, prompting Macquarie Bank to issue an extreme warning of “$200 oil.” For gold, war is both the fuel that supports its role as a safe-haven paradise and the fuse that, by driving up inflation, ultimately sets off the Federal Reserve’s “rate-hike iron hammer.”

Inflation becomes gold’s shackles

If war is gold’s “good news,” then the inflation triggered by war is its “poison.” At this point in 2026, gold’s traditional logic as a safe-haven asset is facing an unprecedented dismantling.

Although on Friday the gold price rose by nearly 1% and moved back above $4,410.70 per ounce, it is still expected to record a 1.5% weekly decline. The root cause is that the market has already seen through the monetary logic behind geopolitics: malignant inflation driven by a surge in oil prices is forcing central banks to abandon rate cuts.

The hawkish stance of Michael Barr, a Fed governor, provides a real-world confirmation of this logic. He stated clearly that, due to the combined effects of the Middle East conflict and tariff policy, inflation not only remains elevated in the non-housing services sector, but its duration may also extend beyond expectations. Under the monitoring of the CME FedWatch tool, traders’ psychological expectations underwent a dramatic reversal: before the outbreak of war, the market was certain there would be two rate cuts in 2026; now, expectations for rate cuts have been completely wiped out, and the probability of rate hikes before year-end has jumped to 40% to 50%.

When the yield on the 10-year U.S. Treasury climbs to 4.45%, the highest level since July 2025, gold’s situation becomes extremely awkward. As a Non-yielding asset, in an environment of extremely high interest rates, the “opportunity cost” of holding gold has become so high as to be intimidating. As analysts Christopher Lewis said: “If you hold paper assets (U.S. Treasuries), you can earn substantial interest returns, while holding physical gold earns no interest and you even have to pay storage costs.” This repricing of liquidity is the core driver behind gold’s softening for four straight weeks.

Liquidity games among institutions: gold became a cash machine

At the micro level in the market, another reason gold has recently underperformed is the operational strategy of institutional investors. Christopher Lewis points out that many retail traders simply treat gold as a “safe haven,” but in real practice, commercial users and large hedge funds operate on entirely different logic.

When war causes global stock markets to fall and leveraged positions face Margin Calls pressure, the gold with the best liquidity often becomes an institution’s “cash machine.” To cover losses in other risk markets, large institutions sell gold to raise cash. This phenomenon has been especially apparent in the current bout of market action in March 2026.

However, not all institutions are pessimistic. Deutsche Bank still maintains a long-term optimistic outlook, setting its target gold price for end-2026 at $5,000 per ounce. Their assumptions are very clear: if the Middle East conflict can end by the close of spring, and the Fed ultimately returns to the rate-cut path due to pressure on economic growth, then gold’s ultimate attribute as a store of value will surge again. But in the current choppy market, WisdomTree strategist Nitish Shah believes that only “smart investors” should build positions by taking advantage of opportunities created by price declines.

Technical analysis: range trading and bottom-finding under pressure from moving averages

From a technical analysis perspective, although gold’s intraday fluctuations are fierce, the overall bearish structure has not yet been broken. XAU/USD is currently in a “lack-of-momentum” rebound.

Key resistance levels: The 4-hour chart shows that gold is still held down by the combined pressure of the 50-period Simple Moving Average (SMA) and the 100-period SMA. The 50-period SMA is near $4,579, while stronger resistance is at $4,842. Until the price can effectively hold above these key moving averages, any rebound may be seen as a “bull trap.”

Support tests: $4,098 touched on Monday is the most important psychological line of defense. If the U.S.-Iran conflict escalates beyond expectations and inflation data further gets out of control, the support strength at this level will face a severe test.

After the RSI indicator rebounded from oversold territory, it is currently fluctuating around 40, indicating that the selling momentum has eased somewhat, but buyers still lack confidence. Although the MACD shows an initial sign of a bullish divergence, in the face of broader macro headwinds, this technical repair looks somewhat thin.

Summary and outlook

In March 2026, the gold market is undergoing a contest over “defining its attributes.” Is it hard currency during wartime, or a neglected asset in the era of high interest rates? Based on current indications, the latter’s influence is taking the lead.

Although Trump’s 10-day extension gives the market some breathing room, as long as the threat of the blockade of the Strait of Hormuz is not lifted, oil prices’ upward push on inflation will continue to suppress gold’s upside. In the short term, it is recommended to closely watch the University of Michigan consumer confidence data and the public statements of multiple Fed officials, because this information will determine whether the market will fully price in the extreme expectation of “rate hikes by year-end.”

The current trading range for gold prices is being compressed between $4,300 and $4,600. Before the mid-May China-U.S. leaders’ meeting or a substantive turning point in the Middle East situation, it is advisable to view gold’s outlook through the lens of “selling short when prices rise and expecting range-bound volatility,” rather than blindly betting on a one-way breakout.

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责任编辑：宋雅芳