$4700 tested as Gold pulls back but bullish potential remains intact

Gold has pulled back sharply from fresh 15-week highs of $4,697, snapping a two-day uptrend in Asia on Tuesday. The US Dollar (USD) holds onto recovery gains, capping further upside in the bullion. The USD remains supported amid a risk-off market environment that extends into early Tuesday, as the decline in technology stocks, combined with the United States (US) sanctions on Iran and a renewed uptick in Oil prices, saps investors’ confidence. Treasury Secretary Scott Bessent said on Monday that the US was launching an "economic onslaught" against Iran's financial connections around the globe. "The US threatened damaging new sanctions on countries that refuse to cut economic ties with Iran but stopped short of actually imposing big new penalties," per CNN News. In response, Iranian Economy Minister Ali Madanizadeh said Tuesday: "Naturally, the enemies intend to launch an economic terrorist attack on us, but we also have our own tools and know how to play the game. Our defense is no longer so defensive; the enemies should wait for an attack." These renewed geopolitical tensions propelled Oil prices, reviving inflation fears and the USD’s safe-haven appeal, slamming Gold nearly $70 so far. Rising Oil prices also drive US Treasury bond yields higher, aiding the Greenback’s recovery at the expense of the non-yielding bullion. However, any corrective downside in the precious metal could likely be limited by reduced bets on a US Federal Reserve (Fed) interest rate hike in September and robust physical demand from India and China. Additionally, the daily technical setup also remains supportive of a ‘buy-the-dip’ strategy for Gold traders amid a relatively light US economic docket. In the daily chart, XAU/USD trades at $4,636.02, extending a bullish bias as price holds above all key moving averages. Spot gold remains supported by the 21-day simple moving average (SMA) at roughly $4,323 and the 100-day SMA near $4,379, while the longer-term 200-day SMA around $4,520 has been reclaimed as underlying demand. The 14-day Relative Strength Index at about 71 sits in overbought territory, suggesting upside momentum remains firm but leaves the metal vulnerable to corrective pullbacks. On the downside, initial support is seen at the 200-day SMA around $4,520, with the 21-day SMA at $4,323 and the 100-day SMA near $4,379 reinforcing a broader demand band on dips. A deeper retracement would expose the 50-day SMA, now tracking close to $4,185, where buyers would be expected to defend the medium-term uptrend. (The technical analysis of this story was written with the help of an AI tool. Know more.) Analysts at Societe Generale note that Gold “broke out of a small base formation earlier this month and has now reclaimed the 200-DMA, resulting in an extended rebound.” They argue that “a cross above this longer-term moving average denotes a resurgence of upward momentum,” and suggest that, from here, “the next potential hurdles could be located at $4,730/$4,770 before the April peak at $4,890.” Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%. The Consumer Price Index (CPI) measures the change in prices of a b