Gold prices surged above the $3,400 mark, driven by renewed demand for safe-haven assets amidst heightened global uncertainties. Trade-related concerns have been a key catalyst for this shift, as investors seek refuge in gold. Despite the Federal Reserve’s pause on a hawkish stance, the U.S. dollar struggled to attract buyers, further supporting the price of gold.
During Thursday’s Asian session, gold (XAU/USD) saw some buying interest, pushing it back above the $3,400 level after a decline from its two-week high. U.S. President Donald Trump’s comments indicated no urgency to sign any trade agreements, which dampened hopes for a swift resolution of the U.S.-China trade war. Additionally, geopolitical risks, such as the ongoing Russia-Ukraine conflict, tensions in the Middle East, and military standoffs between India and Pakistan, have all bolstered the appeal of gold as a safe-haven asset.
Meanwhile, the market’s initial reaction to the Federal Reserve’s pause in its hawkish stance proved short-lived, with the U.S. dollar unable to maintain its mild gains. This, in turn, provided further support for gold. However, a generally optimistic tone in the stock market may limit the bullish momentum of gold, as positive risk sentiment could weigh on buying activity.
Market Summary: Safe-Haven Demand Keeps Gold Bullish
President Trump stated that he has no intention of reducing the 145% tariff on China to encourage trade negotiations. This has dampened the optimism surrounding potential trade talks this week, adding support to gold prices as a safe-haven asset.
In other geopolitical developments, Russian President Putin declared a three-day ceasefire before a major drone attack from Ukraine led to airport closures in Moscow. Ukraine reported that Russia launched guided bombs shortly after the ceasefire took effect. Additionally, Israel’s military announced the full destruction of a key airport in Yemen, controlled by the Houthi rebels, which has further escalated geopolitical risks and supported the bullish gold price outlook.
On the economic front, the Federal Reserve concluded its two-day monetary policy meeting on Wednesday and, as expected, kept the benchmark interest rate unchanged in the 4.25%-4.5% range. In the subsequent statement, the Fed acknowledged increased economic uncertainty. Fed Chair Jerome Powell remarked that there is significant uncertainty regarding tariffs, suggesting that the central bank is in no rush to cut rates. However, this did little to help the U.S. dollar maintain its positive momentum, which further supported gold prices.
Trump also announced that he will unveil a major trade deal with a highly respected country, which could act as a headwind for gold, as it may boost risk sentiment in the equity markets.
The market will closely follow Trump’s press conference at 14:00 GMT in the Oval Office, as well as the release of the U.S. Weekly Initial Jobless Claims data, which could provide further momentum for gold later in the North American session.
Gold Could Retest All-Time High
From a technical perspective, fresh buying near the $3,260 level has supported gold’s upward move. Oscillators on the daily chart are in positive territory, indicating a bias towards the upside. If gold prices break through the $3,434-$3,435 region, the commodity may aim to test new highs, with $3,500 acting as a psychological target.
On the downside, the $3,465-$3,460 area will likely serve as initial support, followed by the $3,328-$3,327 region. A decisive break below these levels would signal a bearish shift, with further support at the $3,265-$3,260 zone, and potentially down to the $3,223-$3,222 range.
Conclusion
Gold’s recent surge above the $3,400 mark is largely driven by global uncertainties, including trade tensions, geopolitical risks, and economic uncertainty. The technical outlook remains bullish, with a potential for gold to retest its all-time highs, depending on how global events unfold. Investors should remain attentive to developments in these areas, as they will continue to influence gold’s price dynamics.
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