Gold rebounds sharply from four-week lows as technical buying dominates

• Gold rebounds sharply as dip buyers return after last week’s violent sell-off from record highs.
• A Firmer US Dollar and easing US-Iran tensions may limit near-term upside.
• Technically, price remains supported above the rising 20-day SMA, while Bollinger Bands continue to widen.

Gold (XAU/USD) climbs more than 5% on Tuesday as dip buyers step back into the market following last week’s violent correction from record highs near $5,600. At the time of writing, XAU/USD is hovering near $4,915, extending its rebound after slipping to near four-week lows around $4,402 on Monday.

The sharp sell-off was largely technical in nature, driven by position unwinding and margin-related liquidation rather than clear deterioration in fundamentals. The broader backdrop for Bullion remains supportive, while Tuesday’s rebound highlights still-elevated volatility across the precious-metals space, with Silver up nearly 8.5% on the day.

That said, Gold may consolidate in the near term in the absence of fresh catalysts, while tentative signs of easing tensions between the US and Iran could temper safe-haven demand. At the same time, renewed strength in the US Dollar (USD) may cap the upside in XAU/USD.

Market movers: US–Iran tensions ease, US–India trade deal announced, DXY rebounds

• Signs of easing US-Iran tensions emerge after Masoud Pezeshkian said on Tuesday that he had instructed his foreign minister to “pursue fair and equitable negotiations” with the United States, with the two sides reportedly preparing to send senior envoys to Istanbul later this week for talks on Iran’s nuclear programme. The comments follow remarks from US President Donald Trump that Iran is “seriously talking”.
• US President Trump announced on Monday that the United States and India have agreed on a trade deal under which US tariffs on Indian goods will be reduced from around 50% to about 18%, while India will step up purchases of US products, with commitments that could reach up to $500 billion.
• US economic data flow has thinned after the Bureau of Labor Statistics said on Monday that the January Employment Situation report due on Friday will be delayed because of the partial government shutdown, with the JOLTS report also postponed.
• The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading near one-week highs around 97.60, recovering after slipping to four-year lows last week.
• The rebound in the Greenback comes after markets welcomed US President Donald Trump’s nomination of former Federal Reserve Governor Kevin Warsh as the next Fed Chair. Warsh, who is widely viewed as an inflation hawk, has helped ease market concerns about the risk of aggressive rate cuts under political pressure.
• Upbeat US manufacturing data has reinforced the view that the Fed can afford to remain patient before resuming monetary policy easing. The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) jumped to 52.6 in January from 47.9 in December, comfortably beating market expectations of 48.5, while the S&P Global Manufacturing PMI edged higher to 52.4 from 51.9.

Technical analysis:

In the daily chart, price holds above the rising 20-day SMA at $4,801.20, keeping the near-term bias pointed higher. Bollinger Bands are widening as price tracks the upper half of the envelope, leaving scope toward the upper band at $5,351.20. RSI at 55.67, up from 46.84, confirms improving bullish momentum. A close through the band ceiling would extend the advance, while a reversal beneath the 20-day baseline would temper the uptrend.

Trend gauges reflect robust but easing strength, with ADX at 42.96 rolling off recent peaks, while ATR has expanded to 211.78, underscoring elevated volatility. Immediate support stands at the lower Bollinger Band at $4,251.21, and holding above that floor would preserve the broader bullish structure. A decisive break below it could trigger a deeper retracement before buyers attempt another push higher.

(The technical analysis of this story was written with the help of an AI tool.)