US-Iran Tensions Spark Gold Price Plunge Amid Inflation Concerns
Gold prices dropped to fresh two-week lows as US forces launched attacks on Iran's Islamic Revolutionary Guard Corps (IRGC) targets. The move sparked speculation about mounting inflationary pressures and interest rate hikes, leading to a surge in bond yields. The yield on the 10-year US Treasury bond rose to its highest since January 2025, reaching 4.79%. This escalation pushed the US Dollar higher against the precious metal.
The attacks on Iran came after recent commercial vessel and personnel incidents in the region. The US President Donald Trump was reportedly considering a plan to limit Tehran's radar and missile capabilities. Meanwhile, the US manufacturing sector showed some signs of weakness, with the August ISM Manufacturing Purchasing Managers' Index (PMI) falling from 55.6 in July to 54.6.
From a technical perspective, the XAU/USD pair is bearish, holding below both the 20-period Simple Moving Average (SMA) and the 100-period SMA. The Relative Strength Index (RSI) indicator has slipped into negative territory, despite being in oversold territory. Initial resistance lies at the 20-period SMA, followed by the 100-period SMA.