Gold prices (XAU/USD) surged to a new all-time high of $3,028 on Tuesday, continuing their upward momentum. The precious metal remains around $3,025 as of the latest update, driven by geopolitical tensions and economic concerns.
Israel’s recent military operations against Hamas tactical positions have contributed to the rise in gold prices. This action is seen as the end of the ceasefire deal that began in January, raising fears of further escalation in the region, including potential attacks from Houthi rebels and retaliation from Hamas.
This escalation in the Middle East coincides with heightened political tensions ahead of a phone call between U.S. President Donald Trump and Russian President Vladimir Putin, aimed at reaching a final deal to end the war in Ukraine. Trump’s recent comments about Russia and the U.S. dividing assets without involving Ukraine have added to concerns that NATO and the EU are being bypassed in the peace process. Additionally, the German Bundestag is set to vote on a new budget that could increase defense spending by approximately $49 billion, adding to the geopolitical risk.
Market Sentiment Drives Safe-Haven Gold Demand
Economic data from the U.S. also played a key role in driving gold prices higher. Analysts noted that the recent sluggish U.S. retail sales data contributed to a shift in market sentiment, with many traders flocking to gold as a safe-haven asset. This comes as concerns grow over a potential slowdown in the U.S. economy, further bolstering the demand for the non-yielding yellow metal.
The upcoming Federal Reserve meeting on Wednesday has added another layer of uncertainty. With a 99% probability that the Fed will keep interest rates unchanged, market participants are also pricing in a 68.6% chance of a rate cut at the June meeting. This expectation of lower rates has added to gold’s appeal, as lower interest rates typically decrease the opportunity cost of holding non-yielding assets like gold.
Meanwhile, the silver market is facing stress, with trade-war concerns leading to disruptions and a surge in borrowing costs. These factors have created additional market instability, making gold an even more attractive investment.
Technical Outlook: Gold’s Bullish Path and Key Levels to Watch
Gold’s technical outlook remains bullish, with several banks setting price targets around $3,200 in the coming weeks and months. Traders will need to be cautious, however, as markets heavily positioned in one direction can signal potential turnarounds.
On Tuesday, gold surpassed key resistance levels (R1 and R2), indicating that the focus is now on larger psychological levels. The next key resistance levels for gold are around $3,020 and $3,030, which will serve as intraday anchor points.
On the downside, the intraday resistance levels at $3,014 and $3,007 are expected to act as support for any brief pullbacks. If gold falls below these levels, the next line of defense is the intraday Pivot Point at $2,994. A crack below the $3,000 level could open the door for further declines.
Conclusion
Gold prices continue to benefit from a combination of geopolitical instability, economic uncertainty, and expectations of monetary policy easing. The precious metal has reached new highs as investors seek safe-haven assets, with key resistance levels to watch in the coming days. While the overall outlook remains bullish, traders should remain mindful of potential pullbacks and market shifts. With growing concerns over the U.S. economy and escalating geopolitical risks, gold’s path remains upward in the near term, but volatility could create opportunities for short-term traders.