Highlights:
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Gold climbs above $4,700 per ounce to a new all-time high
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US-Europe trade tensions lift demand for gold as a safe haven
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Ongoing Russia-Ukraine conflict continues to support gold prices
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Weaker US Dollar strengthens the gold rally
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Markets await US PCE inflation data for monetary policy signals
Gold prices extended their sharp rally on Tuesday, reaching fresh all-time highs as global uncertainty pushed investors toward safe-haven assets. Gold traded above $4,700 per ounce, supported by persistent geopolitical risks, renewed trade war concerns, and continued weakness in the US Dollar. Despite signs of overbought conditions, demand for gold remains strong as investors prioritize capital protection.
Gold rises above $4,700 on safe-haven demand
Gold’s move above the $4,700 level reflects sustained buying interest as global risks remain elevated. Investors continue to favor gold as a hedge against political instability, trade disruptions, and currency weakness. The latest gains build on an already strong upward trend that has been in place for several months.
Market participants point to a combination of geopolitical developments and macroeconomic uncertainty as the primary drivers behind the surge in gold prices. These factors have outweighed concerns about stretched valuations and technical indicators suggesting the market may be overextended in the short term.
Gold supported by Russia-Ukraine conflict
One of the main factors underpinning gold prices is the ongoing Russia-Ukraine war. Recent attacks on Ukraine’s energy infrastructure have kept geopolitical risks firmly in focus. Overnight drone and missile strikes led to power outages across parts of the country, while additional attacks were reported in Kyiv.
These developments have reinforced concerns that the conflict remains unresolved and could escalate further. For investors, this has increased the appeal of gold as a defensive asset during periods of heightened geopolitical tension. Historically, gold tends to benefit during times of conflict, and current conditions continue to support that trend.
Gold gains as US-Europe trade tensions intensify
Gold is also being lifted by growing fears of a potential trade war between the United States and Europe. US President Donald Trump has threatened to impose an additional 10 percent tariff on goods imported from several European countries starting February 1. The proposed tariffs are linked to broader political tensions involving Greenland, adding another layer of uncertainty to global trade relations.
In response, France has indicated it may consider countermeasures, raising the risk of retaliatory actions and a wider US-EU trade conflict. The prospect of escalating trade barriers has unsettled financial markets, prompting investors to seek refuge in gold.
Trade-related uncertainty tends to weigh on economic growth expectations and risk assets, further supporting demand for gold as a store of value during periods of policy unpredictability.
Gold benefits from weaker US Dollar
A softer US Dollar has played a key role in extending the gold rally. Trump’s renewed tariff threats have revived what markets describe as the “Sell America” trade, putting pressure on the dollar. As gold is priced in US Dollars, a weaker currency makes gold cheaper for buyers using other currencies, increasing global demand.
Despite shifting expectations around US monetary policy, the dollar has struggled to find support. This has allowed gold prices to continue rising, even as investors reassess the outlook for interest rates in 2026.
Gold and US monetary policy expectations
Expectations for US interest rate policy remain mixed. Traders have scaled back bets on aggressive rate cuts by the Federal Reserve next year. This followed comments from Trump suggesting he may keep current National Economic Council Director Kevin Hassett in his role, adding uncertainty around who will replace outgoing Federal Reserve Chair Jerome Powell.
Normally, reduced expectations for rate cuts could support the US Dollar and weigh on gold. However, in the current environment, political uncertainty and trade concerns have offset this dynamic, leaving gold well supported despite shifting policy assumptions.
Gold technical outlook remains bullish
From a technical standpoint, gold remains in a clear uptrend. Prices have broken above the upper boundary of an ascending channel that began near $3,845, confirming strong bullish momentum. Indicators such as the MACD continue to signal buyer dominance.
At the same time, the Relative Strength Index is near 71, indicating overbought conditions. This suggests that while the broader trend for gold remains positive, the market could see short-term consolidation or a modest pullback before resuming its upward move.
Gold traders watch US PCE inflation data
Looking ahead, investors are likely to remain cautious ahead of key economic data. The US Personal Consumption Expenditure Price Index, due on Thursday, will be closely watched. As the Federal Reserve’s preferred inflation gauge, the PCE data could influence expectations around future interest rate decisions and impact gold prices.
Any signs of easing inflation could reinforce expectations of a more accommodative policy stance, potentially supporting gold further. Conversely, stronger-than-expected inflation could introduce near-term volatility.
Gold remains favored amid global uncertainty
For now, gold remains firmly supported by geopolitical risks, trade tensions, and a weaker US Dollar. While technical indicators point to stretched conditions, the underlying drivers of the rally remain in place. As long as global uncertainty persists, gold is likely to stay in demand as investors seek stability and protection in an increasingly volatile environment.
