Gold's Record-Breaking Rally Continues Amid Geopolitical Tensions and Safe-Haven Demand
Gold prices are soaring, reaching near-record highs as investors seek safe-haven assets in the face of escalating geopolitical and economic uncertainties. The precious metal has surged more than 10% since the start of the week, with the US Dollar's decline to its lowest level since February 2022 adding further fuel to the rally. Despite US Federal Reserve Chair Jerome Powell's hawkish remarks and the Fed's decision to leave interest rates unchanged, gold remains largely unaffected, indicating a strong upward trajectory for XAU/USD.
The recent concerns over US tariff increases and Germany's lowered growth forecasts have intensified global economic worries. US President Donald Trump's warning to Iran and the country's response with threats of strikes have added to the tense atmosphere. Russia's ongoing aerial attacks on Ukraine, including a deadly drone strike on a passenger train, have further contributed to the safe-haven demand for gold.
The XAU/USD pair's upward momentum is supported by the US Dollar's weakness and the Fed's decision to maintain the status quo. Traders anticipate the Fed will keep rates unchanged until the end of the quarter and possibly beyond, with two more rate cuts priced in for 2026. This outlook benefits gold, as the US Dollar's recovery from its four-year low is limited.
Technical Analysis: Gold's Uptrend Intact Despite Overbought RSI
Gold's overnight breakout above the short-term resistance level at $5,303.94 confirms the bullish trend. The Moving Average Convergence Divergence (MACD) line is above the Signal line, indicating a strengthening upside momentum. However, the Relative Strength Index (RSI) has reached an overbought level of 88, suggesting a potential pause in the rally.
If the momentum slows, initial support is found at the channel's lower boundary at $5,135.11. A contraction in the MACD histogram would signal a weakening impulse, while an easing RSI from overbought levels would normalize conditions. Nonetheless, holding above the former channel resistance would maintain the broader bullish bias, allowing for orderly pullbacks within the rising structure.
US Dollar's Performance: Strength Against Canadian Dollar
The US Dollar's performance against major currencies over the last seven days is as follows:
- USD: -2.50% against CAD
- USD: -3.02% against EUR
- USD: -3.32% against JPY
- USD: -2.28% against GBP
- USD: -4.52% against CAD
- USD: -3.96% against AUD
- USD: -3.73% against CHF
The heat map illustrates the percentage changes of major currencies against each other, with the US Dollar as the base currency and the selected quote currency from the top row.
