Gold extends record-breaking streak as safe-haven demand persists
Gold scales new all-time peaks for the ninth day in a row amid sustained safe-haven buying.
Concerns about the Fed’s independence weigh on the USD and benefit the precious metal.
The XAU/USD bulls seem rather unaffected by overbought conditions on short-term charts.
Gold (XAU/USD) prolongs its record-setting rally for the ninth straight day and advances over 3% on Thursday, climbing to the $5,600 neighborhood during the Asian session. Investors continue to seek refuge in traditional safe-haven assets on the back of heightened geopolitical and economic uncertainties, which have been fueling the commodity's parabolic rise of more than 10% since the beginning of this week. Apart from this, the recent US Dollar (USD) slump to its lowest level since February 2022 turns out to be another factor behind the precious metal's blistering rally witnessed over the past two weeks or so.
Meanwhile, the non-yielding Gold seems rather unaffected by US Federal Reserve (Fed) Chair Jerome Powell's hawkish remarks on Wednesday that followed the highly anticipated decision to leave interest rates unchanged. Even the underlying bullish tone – as depicted by a generally positive sentiment around the equity markets – does little to hinder the bullion's strong positive momentum. This, in turn, suggests that the path of least resistance for the XAU/USD pair remains to the upside, though extremely overbought conditions some warrant caution for bulls before positioning for any further appreciation.
Daily Digest Market Movers: Gold buying remains unabated as global uncertainties continue to boost safe-haven demand
Concerns that US tariff increases from last year continue to weigh on the global economic outlook resurfaced after Germany – the Eurozone's biggest economy – on Wednesday lowered its growth forecasts for this and next year.
US President Donald Trump warned Iran to come to the table and make a deal on nuclear weapons, or future US attacks would be far worse. Iran responded with a threat to strike against the US, Israel, and those who support them.
In other geopolitical developments, Russia continues with its aerial attacks on Ukrainian cities and infrastructure. The latest attack involved a Russian drone strike on a passenger train in northeastern Ukraine that killed five people.
This, along with the emergence of fresh US Dollar selling, assists the safe-haven Gold to prolong the record-setting rally for the ninth straight day and climb to the $5,600 neighborhood during the Asian session on Thursday.
The US Federal Reserve, as was anticipated, decided to leave rates unchanged at the end of a two-day meeting on Wednesday. Two Fed Governors – Stephen Miran and Christopher Waller – dissented in favor of a 25 basis-points cut.
In the post-meeting press conference, Fed Chair Jerome Powell said that inflation was still well above the 2% target. The muted market reaction, however, suggests that investors remain concerned about threats to the Fed's independence.
A criminal investigation of Powell by the Department of Justice and an evolving effort to fire Fed Governor Lisa Cook put the focus on the freedom of monetary authorities from direct political interference in formulating policies.
Meanwhile, traders seem convinced that the Fed will maintain the status quo through the end of this quarter and possibly until Chair Jerome Powell's tenure ends in May, though they are still pricing in two more rate cuts in 2026.
The outlook, in turn, fails to assist the US Dollar to build on the previous day's modest recovery from a nearly four-year low and turns out to be another factor that provides an additional boost to the non-yielding yellow metal.
Traders now look to Thursday's release of the usual Weekly Initial Jobless Claims data from the US for a short-term impetus. The supportive fundamental backdrop, however, remains tilted firmly in favor of the XAU/USD bulls.
Gold needs to consolidate before the next leg up amid extremely overbought conditions
The overnight breakout through a short-term ascending channel hurdle near $5,303.94 keeps the bullish tone intact. Moreover, the Moving Average Convergence Divergence (MACD) line extends above the Signal line, with both above zero, and the histogram is widening, suggesting strengthening upside momentum.
However, the Relative Strength Index (RSI) sits at 88 (overbought), which could cap immediate advances and prompt a pause. Should momentum cool, initial support aligns with the channel’s lower boundary at $5,135.11, where buyers could re-emerge. A contraction in the MACD histogram would hint at a fading impulse, while the RSI easing from overbought would normalize conditions; even so, holding above former channel resistance would preserve the broader bullish bias and keep pullbacks orderly within the rising structure.
Why do people invest in Gold?
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Who buys the most Gold?
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
How is Gold correlated with other assets?
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
What does the price of Gold depend on?
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
The above content was completed with the assistance of AI and has been reviewed by an editor.
