gold prices continue to find support amid a complex landscape of macroeconomic and geopolitical factors, reaching new all-time highs during the recent trading session. The precious metal surged early in the week, buoyed by expectations of dovish monetary policy from the Federal Reserve and escalating geopolitical tensions that increase demand for safe-haven assets.
Following a record peak around $3,759-3,760, gold experienced a modest retreat as traders adopted a cautious stance, partly due to technical overbought conditions. Despite this pullback, substantial downside appears limited. The Federal Reserve’s recent decision to cut interest rates for the first time since December and signals of further easing this year have contributed to a weaker US dollar, which underpins gold ’s rally. These policy shifts reflect concerns over a slowing labor market and subdued inflation pressures, nurturing a supportive environment for non-yielding assets like gold .
Geopolitical risks also play a significant role in shaping market sentiment. Ongoing conflicts, particularly between Russia and Ukraine, alongside rising tensions in the Middle East, continue to reinforce demand for gold as a safe haven. Recent hostilities, including drone strikes and accusations of airspace violations, have heightened geopolitical uncertainties, adding to the market’s risk-off mode. Meanwhile, geopolitical developments involving Israel and Gaza, alongside diplomatic talks aimed at conflict resolution, have kept investors vigilant.
Market participants are also factoring in expectations that the Federal Reserve will implement interest rate cuts more rapidly than initially projected. Some traders speculate that the federal funds rate could fall below 3% by 2026, which would further bolster gold ’s appeal by reducing opportunity costs associated with holding the metal.
Technically, gold remains resilient, with recent breakouts above key levels suggesting continued upward momentum despite overbought conditions indicated by the relative strength index. While minor corrections are possible, current support levels around $3,726-3,725 and $3,686-3,685 serve as buffers against deeper declines. A break below these supports could signal a temporary shift in momentum, but overall sentiment remains bullish in the near term, supported by both macroeconomic policy outlooks and geopolitical tensions.
