Gold prices (XAU/USD) surged to a new all-time high of around $3,019 during Tuesday’s European session. The precious metal continues to benefit from safe-haven demand driven by concerns over U.S. President Donald Trump’s policies, fears of a U.S. recession, and growing geopolitical risks. Additionally, market expectations that the Federal Reserve will cut borrowing costs several times this year have fueled the metal’s second consecutive day of gains.
While the global risk sentiment remains positive, bolstered by China’s stimulus measures and hopes for a peace deal in Ukraine, the U.S. dollar has seen a modest recovery from its recent lows. Despite this, investors are likely waiting for the outcome of the Federal Open Market Committee (FOMC) meeting on Wednesday before making new bets on gold.
Geopolitical Tensions and Economic Data Impact Gold
Recent geopolitical developments, including Israeli military strikes in Gaza and the failure to extend the ceasefire, have escalated tensions in the region, further supporting demand for safe-haven assets like gold. U.S. Treasury Secretary Scott Bessent’s warning about the potential for a U.S. recession also added to gold’s appeal.
Economic data from the U.S. showed retail sales rising by just 0.2% in February, falling short of expectations and highlighting consumer caution. This has led to increased bets that the Federal Reserve may resume its rate-cutting cycle, benefiting gold prices.
Technical Outlook and Future Prospects
Technically, gold’s breakthrough above $3,000 suggests further bullish potential, although the daily Relative Strength Index (RSI) indicates slightly overbought conditions. This may lead to a period of consolidation or a slight pullback before the uptrend resumes. Key support levels are found around $2,980-$2,978, with further support at $2,956. A break below these levels could lead to additional technical selling, pushing gold toward $2,900.
Conclusion
Gold continues to rise, driven by geopolitical instability, economic concerns, and expectations of Fed rate cuts. While the short-term outlook remains positive, technical indicators suggest a potential consolidation phase before further gains. Traders will closely watch the FOMC meeting for new direction, but the broader trend suggests that gold may continue its upward momentum in the coming months.