Gold has recently dipped from its all-time high of nearly $4,700 but remains optimistic. US President Trump’s latest tariff threats against European nations have spurred increased demand for safe-haven assets like gold. Geopolitical issues, such as trade tensions between the US and Europe and frictions concerning US-Iran relations, are driving the need for gold. Additionally, a weakening US Dollar supports gold prices, although fewer expected rate cuts by the Federal Reserve in 2026 could limit price increases.

Gold Reaches All-Time High

Trump’s proposed tariffs on European products could escalate if no agreement over Greenland is reached, raising fears of a trade war and pushing gold to its highest level ever. Geopolitical risks are amplified by tensions involving Iran and the Russia-Ukraine conflict. Despite expectations of fewer rate cuts from the US Federal Reserve, the US Dollar struggles and has retreated from its recent highs. Attention is now focused on forthcoming US economic data that could influence market sentiment. Technical indicators suggest a solid short-term uptrend for gold, but resistance around $4,700 may cap further gains. In currency trading, the US Dollar has declined against major currencies like the Euro and the Swiss Franc, which further boosts gold’s appeal. Market performance shows a strong preference for safe-haven assets amid global uncertainties. With gold reaching a record near $4,700, the current landscape is being shaped by a strong flight to safety. We should brace for ongoing volatility, meaning options strategies may work better than direct futures positions. The bullish momentum is robust, but with prices stretched, a cautious approach is advisable.

Trade War Fears Impact Gold Prices

The latest tariffs on Europe are a major driver behind rising trade war fears and the weakening of the US dollar. This combination is a strong reason for investors to flock to gold. Ongoing geopolitical tensions and conflicts create a supportive atmosphere that is likely to continue in the coming days. A similar pattern emerged in late 2025 when the Gold Volatility Index (GVZ) surged over 15% due to geopolitical events, highlighting gold’s sensitivity to risk. Historically, increased trade disputes, like those in 2018 and 2019, have coincided with substantial gold rallies. This historical context supports the current upward trend. However, a challenge is the market’s changing perspective on Federal Reserve policy, with traders anticipating fewer rate cuts in 2026. Since gold yields no interest, sustained high rates increase the cost of holding it. This is the main reason preventing an even bigger rally. All attention will now turn to the upcoming economic data this Thursday, especially the PCE Price Index and the final revision of Q3 2025 GDP. Current forecasts for PCE inflation hover around 2.4%. Any figure above that could lower the chances of Fed rate cuts, potentially causing a short-term dip in gold prices, even if the geopolitical outlook remains positive. From a technical view, prices are testing the upper limit of their rising channel, while the Relative Strength Index is close to 70, signifying overbought conditions. This indicates that while the trend appears upward, the risk of a pullback toward support at $4,406 is significant. Using call spreads could enable profit from further upward movement while limiting risk if prices retreat from these record highs. Create your live VT Markets account and start trading now.

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