Gold prices (XAU/USD) remained near record highs on Thursday, showing resilience despite a slight pause in momentum. The precious metal was supported by ongoing geopolitical and economic uncertainty, with investors awaiting further developments, particularly from the Federal Reserve’s anticipated rate cuts later this year.
Fed’s Policy Outlook and Gold’s Safe-Haven Appeal
The Federal Reserve’s decision to leave interest rates unchanged earlier this week has not deterred market expectations of future rate cuts. Traders are largely anticipating a reduction in rates by the end of the year, as the Fed looks to address economic risks arising from global trade tensions. With central banks continuing to show strong demand for gold, the precious metal’s safe-haven appeal remains intact.
“The ongoing geopolitical factors and central bank support could still push gold prices upward,” noted Peter Fertig, an analyst at Quantitative Commodity Research. Despite the U.S. dollar’s 0.3% rise, making gold more expensive for foreign buyers, gold’s appeal continues to grow due to its hedge against uncertainty, particularly in light of trade tensions and inflationary pressures from U.S. tariffs.
Geopolitical Tensions and Tariff Concerns Support Gold
Concerns over U.S. tariffs have been a driving force behind the surge in gold prices, with 16 record highs recorded this year alone, four of which exceeded the $3,000 mark. The aggressive tariffs are seen as inflationary, further fueling demand for gold as a safe-haven asset.
Gold’s rally is also bolstered by ongoing geopolitical tensions, particularly in the Middle East. Israeli airstrikes and other regional conflicts have heightened demand for the precious metal, seen as a store of value in times of crisis.
Fed’s Potential Rate Cuts and Gold’s Technical Outlook
Market expectations are currently pricing in a 66 basis-point rate cut from the Fed this year, with two reductions of 25 basis points each likely. The anticipation of these cuts is supporting gold, as lower interest rates typically make gold more attractive by reducing the opportunity cost of holding the metal.
The technical outlook for gold remains positive, with the price staying above key support levels. If prices dip below $3,030, a slight pullback could be expected, but any decline is likely to be viewed as a buying opportunity. Support levels are seen at $3,005-$3,000, with further support at $2,980-$2,978. A breach of these levels could bring prices down to the $2,956 zone, but a strong upward bias remains.
Conclusion
Gold prices continue to be driven by a mix of economic uncertainty, geopolitical tensions, and expectations of U.S. rate cuts. Despite a brief pause in momentum, the bullish trend is expected to remain, with any minor corrections seen as potential buying opportunities. Traders will closely monitor the Federal Reserve’s actions and economic developments for further guidance.