Gold rallies to fresh all-time high on Trump's tariff threats, geopolitical risks
- Gold gains strong positive traction as Trump’s fresh tariff threats boost safe-haven demand.
- Heightened geopolitical risks and the emergence of some USD selling also benefit the bullion.
- Reduced bets for two more Fed rate cuts in 2026 could act as a headwind for the yellow metal.
Gold (XAU/USD) catches aggressive bids at the start of a new week and jumps to the $4,700 neighborhood, or a fresh all-time peak, during the Asian session amid the global flight to safety. US President Donald Trump threatened to impose new tariffs on eight European countries that opposed his plan to acquire Greenland. The announcement drew criticism from European officials and raised concerns about a broader transatlantic trade dispute. This comes on top of heightened geopolitical risk and triggers a fresh wave of the global risk-aversion trade, prompting investors to seek refuge in the traditional safe-haven commodity.
Meanwhile, trade war fears trigger a crisis of confidence in US assets and trigger a US Dollar (USD) corrective pullback from its highest level since December 9, touched last week, which lends additional support to the Gold price. However, reduced bets for two more interest rate cuts by the US Federal Reserve (Fed) in 2026 help limit deeper USD losses and act as a headwind for the non-yielding yellow metal. Nevertheless, the broader supportive fundamental backdrop suggests that the path of least resistance for the bullion remains to the upside and backs the case for an extension of the recent well-established upward trajectory.
Daily Digest Market Movers: Gold draws support from global flight to safety and weaker USD
- US President Donald Trump vowed on Saturday that he would impose an additional 10% tariffs on goods from eight European nations starting February 1, until the US is allowed to buy Greenland. Trump added that the rate is set to rise to 25% in June if no agreement is reached.
- Major European Union states condemned the tariff threats over Greenland as blackmail, with France proposing to respond with a range of previously untested economic countermeasures. This reignites trade-war fears, pushing the safe-haven Gold to a fresh record high on Monday.
- Amid rising tensions with the US, Iran issued a fresh warning that any attack on Supreme Leader Ayatollah Ali Khamenei could spark an all-out war. Adding to this, the intensifying Russia-Ukraine conflict keeps geopolitical risks in play and further benefits the safe-haven commodity.
- Ukraine’s foreign minister Andrii Sybiha said that there was evidence Russia was considering attacks on key sites linked to nuclear power stations. President Volodymyr Zelensky added that Russian strikes demonstrated that they were not interested in diplomacy or ending the war.
- Trump said that he would prefer to keep National Economic Council director Kevin Hassett in his current role, suggesting that someone else will be tapped to succeed Federal Reserve Chair Jerome Powell. This forced investors to trim their bets for more aggressive easing by the Fed.
- The US Dollar, however, struggles to benefit from a shift in the likelihood of Fed rate cuts in 2026 and retreats sharply from its highest level since December 9, touched last week. This turns out to be another factor that contributes to the precious metal's strong intraday move higher.
- Traders now look forward to the release of the US Personal Consumption Expenditure (PCE) Price Index and the final US Q3 GDP print for a fresh impetus on Thursday. The fundamental backdrop, however, seems tilted in favor of the XAU/USD bulls and backs the case for further gains.
Gold needs to break through trend-channel resistance for bulls to retain near-term control
The bullion has been scaling higher from the late October low along an ascending channel, which points to a well-established short-term uptrend. The Moving Average Convergence Divergence (MACD) holds above the zero line and has improved over recent sessions, suggesting strengthening bullish momentum. The Relative Strength Index at 69.96 sits near overbought, which caps the Gold near the ascending channel resistance.
A rejection at the upper band would shift focus to support at $4,406.94, where the channel structure would be expected to attract bids. A sustained close above resistance would extend the advance, while a pullback would keep the consolidation phase within the channel in play and delay fresh trend extension.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
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.
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.
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.
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.
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