Gold rebounded on a TACO-driven de-escalation after testing key support near 4,000, as a sudden shift in US policy stance halted the sharp selloff. Prices had earlier dropped to 4,098.54, putting the psychological 4,000 level at risk before recovering on headlines pointing to a temporary pause in escalation.
The reversal was triggered by US President Donald Trump’s announcement that the US would postpone military strikes on Iranian energy infrastructure. In a Truth Social post, Trump said the two sides had engaged in “very good and productive conversations” and that he had instructed a delay of “any and all military strikes… for a five day period,” signaling a shift away from immediate confrontation.
This marks a sharp pivot from the 48-hour ultimatum issued just a day earlier, where the US had threatened to “obliterate” Iranian power and energy facilities if the Strait of Hormuz was not reopened. The rapid change in tone—from escalation to negotiation—fits the pattern traders now describe as a “TACO” moment, where sudden policy reversals drive abrupt market moves.
From a macro perspective, the development has temporarily eased immediate geopolitical risk, prompting short covering in Gold. However, the underlying drivers of the recent decline remain intact. Rising yields and expectations of tighter monetary policy, fueled by energy-driven inflation, continue to weigh on non-yielding assets.
Technically, Gold has found support at a critical confluence zone. The 4,000 psychological level aligns closely with the 55 W EMA at 4,001.61, as well as the 38.2% retracement of 1,614.60 (2022 low) to 5,598.38 (Jan high) at 4,076.57. The ability to hold above this region suggests that a near-term bottom may be forming.
However, confirmation of stabilization requires a stronger recovery. A break above 38.2% retracement of 5,419.02 to 4,098.46 at 4,602.90, would indicate that downside momentum has been exhausted and that a more sustained rebound is underway.
If such a move materializes, Gold could extend gains toward 55 D EMA, currently around 4875.45. This would represent a recovery phase within the broader correction, supported by a stabilization in market sentiment and a pause in liquidation pressures.
Conversely, failure to build on the current rebound would leave Gold vulnerable to renewed downside. A decisive break below 4000 would signal that the correction is not yet complete, exposing deeper losses as macro pressures and positioning dynamics continue to dominate price action.
