Gold rebounds from the 200-day SMA after clearing excesses and acting as a source of liquidity during the war
Gold is rebounding from its 200-day simple moving average after a sharp pullback driven by deleveraging, exchange-traded fund outflows and liquidity demand during the Iran war. The move suggests the longer-term uptrend may still be intact, although positioning and macro stress remain important near-term drivers.
Market Analyst
Liquidity, retail selling and long-position cuts
The fall in gold during one of the most acute phases of the war with Iran may be explained by a combination of liquidity demand, retail selling and the reduction of trend-following long positions. That is the message from the latest World Gold Council report, which suggests the move was driven less by a loss of safe-haven appeal and more by forced positioning adjustments.
Flows point to retail selling and long reductions
According to the World Gold Council, 84.8 tonnes of gold were sold through exchange-traded funds in March, a vehicle more commonly used by retail investors. Outflows totalled 87 tonnes in the US and 7.3 tonnes in Europe, partly offset by inflows of 9.9 tonnes in Asia.
At the same time, the non-reportable category in derivatives markets, also associated with retail investors, recorded a reduction equivalent to 18 tonnes of gold. Trend-following participants, grouped in the managed money category, also cut long positions as the price broke below key moving averages. Momentum strategies appear to have played an important role in accelerating the correction.
SPDR Gold Trust with trading volume and open interest, chart extracted from TradingView on 8 April 2026.
Gold may also have been used as collateral
The need for liquidity to absorb the energy shock may also have contributed, in line with the recent sale of US Treasuries by some central banks. In this context, the World Gold Council notes that the Central Bank of Turkey used 50 tonnes of gold as collateral, a practice also seen during the 2023 earthquake and the pandemic.
It is not unusual for central banks to use gold in this way during periods of acute market stress. That helps explain why gold can come under pressure even when the geopolitical backdrop would usually be expected to support it.
Activity remains high as gold rebounds from the 200-day SMA
While the market awaits official data from the International Monetary Fund and the World Gold Council on central-bank activity during the conflict, trading volumes remain elevated. In March, average daily activity across futures, over-the-counter markets and exchange-traded funds stayed well above longer-term norms.
From a technical perspective, gold has started to build a rebound from the $4,100 area, close to the 200-day simple moving average. The broader trend remains constructive after excess positioning has been reduced, but whether the rebound holds may still depend on liquidity conditions, geopolitical developments and investor demand.
Gold futures on a daily chart with the 200-day SMA and open interest in derivatives markets according to the CFTC, extracted from TradingView on 8 April 2026
Gold’s decline may have only started
Gold has been consolidating below key resistance levels, but several technical patterns suggest further downside may follow. Declining volatility could also indicate fading safe-haven demand and weakening momentum.
