Gold prices are surging as market participants seek safe-haven assets amid renewed geopolitical tensions, trade uncertainties, and a retreating US Dollar (USD). Spot gold (XAU/USD) rallied during the Asian session on Thursday, reaching a weekly high near $3,377–3,378, bolstered by rising demand for non-yielding assets and expectations of easier monetary policy by the Federal Reserve.
The bullish momentum continues to build, supported by fundamental and technical drivers that are realigning investor sentiment toward the precious metal. For a clearer understanding, Aurudium outlines the essential elements of this topic in their article.
Safe-Haven Demand Surges Amid Trade and Geopolitical Tensions
The global flight to safety has intensified following the US President’s tariff threats, which have reignited concerns about global trade stability. He signaled his intention to unilaterally set tariff rates and notify trading partners within a two-week window, disrupting market optimism following positive US-China trade discussions in London.
These developments have revived fears of an escalating trade war, prompting investors to reduce exposure to riskier assets and rotate into traditional safe havens like gold.
Simultaneously, escalating tensions in the Middle East and Eastern Europe are amplifying the risk-off sentiment. The US State Department’s directive for some embassy personnel to leave Baghdad, amid heightened Iranian threats and intensified Russian military operations in Ukraine are reinforcing geopolitical risk.
Weaker US Dollar Following Softer CPI Enhances Bullion Appeal
Another key tailwind for gold is the ongoing weakness in the US Dollar, largely driven by cooling inflation data. The US Bureau of Labor Statistics reported that headline CPI rose at a slower-than-expected 2.4% annual pace in May, compared to market expectations of 2.5%. Meanwhile, core CPI, which excludes food and energy, held steady at 2.8%, matching April’s pace.
These readings reinforce expectations that the Federal Reserve will cut interest rates as early as September, with futures markets pricing in a 70% probability of such action. As a result, US Treasury yields have declined, eroding the relative attractiveness of the USD and boosting interest in non-yielding assets like gold. The dovish Fed outlook is now a crucial component of gold’s medium-term bullish narrative.
Technical Outlook: Bullish Momentum Points to $3,400 and Beyond
From a technical perspective, gold has staged a compelling recovery from its 200-period Simple Moving Average (SMA), bouncing convincingly and breaking above the $3,348–3,350 resistance zone. This breakout confirms a bullish reversal pattern and aligns with rising positive momentum indicators on both the daily and hourly charts.
If the buying pressure persists, gold could aim to reclaim the psychological $3,400 level, which serves as a key bullish milestone. Sustained strength above this round number would likely open the door for a rally toward the $3,430–3,435 area, with scope to challenge the all-time high near $3,500, last reached in April.
The technical landscape thus aligns with broader market sentiment, further strengthening the gold price outlook.
Downside Risks Appear Contained in Near Term
On the flip side, the former resistance turned support near $3,350–3,348 now acts as a critical downside buffer. Any pullbacks from current levels are likely to encounter strong buying interest near this zone. Deeper retracements may test the $3,323–3,322 region, with further protection offered by the 200-period SMA on the 4-hour chart, close to the $3,300 round figure.
Only a sustained break below this pivotal support would threaten the current bullish bias and potentially trigger a deeper correction. Until then, the path of least resistance remains to the upside, given the alignment of geopolitical, macroeconomic, and technical catalysts.
Conclusion: Gold’s Bullish Drivers Remain Intact
In summary, gold’s climb to a weekly high is driven by a confluence of safe-haven demand, a weaker US Dollar, and dovish Fed expectations. The intensification of geopolitical tensions, coupled with trade policy uncertainty and a softening US inflation landscape, has created a fertile environment for gold bulls.
With technical indicators confirming a bullish breakout and the macro backdrop favoring non-yielding assets, the gold price is well-positioned to extend its rally in the near term. While upcoming US economic data may offer short-term volatility, the broader fundamental and technical setup continues to suggest that gold could soon test higher levels, including $3,400 and potentially $3,500 in the sessions ahead.
