Gold revisits sub-$1600 region as traders reassess the risks of US-Iran war

• Gold prices step back from multi-year highs as markets await clear direction.
• Iran said it will stop attacking if there is no response from the US.
• Tehran earlier hit the US military base in Iraq and triggered the risk-on.

Gold prices retrace the early-day gains from $1,611.30 to $1,591 by the press time of the initial trading session on Wednesday. The yellow metal, often considered as a risk-safety, surged to the highest since April 2013 after Iran attacked the US airbases in Baghdad.

Read: Iran’s missiles have hit American base near Erbil airport in Iraq’s Kurdistan – Reuters citing Fars

After the rush to risk-safety, which mainly fuelled Gold, traders are now reassessing the odds of the US-Iran war. The reason being the absence of any immediate response from the US except for the words that they will take all necessary measures to protect and defend US personnel, partners, and allies in the region.

Also contributing to the pullback could be statements from Iran and China. While Tehran offered peace if the US doesn’t retaliate, the editor of China’s Global Times (GT) urged US President Donald Trump to exercise restraint.

Read: Iran: Will stop attacking if there is no response from the US, risk-recovery underway

With this, the US 10-year treasury yields are recovering from the low of 1.71% to 1.77% whereas S&P 500 Futures also bottoming out from 3,181 to 3,215 by the press time.

Given the on-going talks between the key diplomats at White House, markets are all ears on any headlines concerning the US-Iran war.

It’s worth mentioning that China has been silently opposing the US strikes that killed the Iranian military personnel. The same could have negative consequences on the US-China trade deal if the US President Donald Trump notices that.

Technical Analysis

Unless declining back below September 2019 top near $1,557, gold prices can keep being strong.