Gold’s (XAU/USD) Tug of War: : Oil spike, rate fears, and the battle for control

• Gold prices are under pressure, caught between safe-haven demand (bulls) from escalating Middle East tensions and the "higher rates for longer" narrative (bears) driven by a strong US Dollar and inflation fears.
• The weekend's oil storage strikes in Iran pushed oil over $100/barrel, increasing inflation concerns.
• The G-7 is considering releasing oil reserves, a move that could temporarily ease oil prices, potentially softening the hawkish rate view and aiding Gold.
• Technically, Gold is consolidating, with a breakout on either side of the $5193/$5038 range needed for a clear direction.

Most Read: Markets Weekly Outlook - Geopolitics Overpower Fundamentals: The $150 oil warning and the rate cut dilemma

The price of gold is down around 1.6% on the day as the precious metal faces a tug of war between bears and bulls.

The safe haven demand many have been expecting has been somewhat overshadowed by the idea of higher rates for longer which has contributed to a stronger US dollar. At this stage neither bulls nor bears have been able to seize control, however the longer the status quo in the Middle East remains as is, the case for bears will grow stronger.

The situation in Iran escalated over the weekend with strikes on Tehran which focused on Oil storage facilities. The strikes raised concerns around energy supply and its impact on global inflation.

This prompted a strong risk-off sentiment environment with Oil prices soaring over $100/barrel and Gold peaking overnight at $5192/oz. Since then, Gold has fallen to an intraday low of $5014/oz as markets continue to price in less rate cuts from the Federal Reserve.

According to the latest LSEG data, markets are now only pricing in around 37 bps of rate cuts in 2026. This is down from around 66 bps prior to the spike in oil prices.

This hawkish narrative is impacting Gold prices at the moment while profit taking after last night's surge may have also played some role in the selloff.

Another development over the weekend was the announcement of Mojtaba Khamenei as Iran's new supreme leader. The development is seen by many political analysts as a sign that any hope of a swift conclusion to the conflict is rather slim at this stage.

While tensions may remain high in the Middle East which will feed haven demand, it will also likely keep oil prices elevated and thus lead to a hawkish narrative around rates. This will keep the tug of war between bulls and bears firmly in place and may see Gold remain volatile but in a tighter range in the upcoming trading sessions.

There has been growing chatter throughout the day that the G-7 may release oil reserves to help shore up supply concerns and could aid prices. Initially comments were made by Japan Finance Minister Katayama who said that the IEA urged G-7 nations to release oil stockpiles.

This was followed by comments from IEA Director Birol, who stated that IEA members hold over 1.2 billion barrels of public emergency oil stocks. The G-7 Finance Minister's statement confirmed that possible measures include an oil stockpile release after discussing the situation in the Middle East.

According to the statement, G7 Energy Ministers are to hold a teleconference on Tuesday, and G7 leaders later this week with a final decision on whether to release oil reserves more likely to be taken by G7 leaders.

Such a move could lead to a temporary drop in oil prices which in turn could aid Gold as it may see inflation fears ease, even if it is temporary.

From a technical standpoint, looking at the H1 chart for Gold and as you can see price has been caught in a period of consolidation.

Given the overarching fundamental and geopolitical risks, it might be better to look at shorter-term moves until the bigger picture becomes clearer.

A 1 hour candle close on either side of the red block could lead to a breakout in that direction. If no breakout materializes, price could continue to coil within the range.

On the upside of the range we have the $5193 level while the downside of the range comes in around the $5038 handle. .

The period-14 RSI is eyeing a break back above the 50-neutral level on the H1 chart which would hint at a potential shift toward more bullish momentum.

However, as has been the case for the majority of the day, any attempt to push prices higher by bulls has been met by swift selling pressure. A tug of war if you will.

Gold (XAU/USD) One-Hour Chart, March 9, 2026

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