Gold Prices Attract Buyers Amid Global Uncertainty

• Gold prices rise for the third consecutive day as investors seek safe havens.
• Growing geopolitical tensions and trade uncertainties support demand for traditional safe assets.
• Speculations around a Federal Reserve rate cut are influencing the XAU/USD pair, although a USD rebound poses a limit.

Gold (XAU/USD) shows a positive trend for the third day on Friday, although it has pulled back slightly from the high since April 22nd seen earlier in the European session. The recent rebound of the US dollar (USD) from its lowest level since March 2022 is a significant factor weighing on gold. Yet, a fresh wave of global risk aversion keeps driving demand for precious metals considered safe havens.

With uncertainties surrounding trade and escalated geopolitical tensions in the Middle East, investors are shying away from risky assets, which is evident in the downturn of global stock markets. Meanwhile, increased speculation that the Federal Reserve may lower borrowing costs in 2025 adds pressure on the USD, particularly amid indications of easing inflation. This could help limit any significant downturns in gold prices.

Market Update: Caution Among Gold Buyers Amidst USD Strengthening

• Israel has executed a preemptive airstrike on Iran, targeting military and nuclear facilities, marking a serious escalation in Middle Eastern conflicts. This has driven gold prices to their highest levels since April 22nd during an Asian trading session.
• Israeli Prime Minister Benjamin Netanyahu stated that the operation is aimed at Iran’s nuclear capabilities and will persist until the perceived threat is eliminated. A state of emergency has been declared, with expectations of potential retaliation from Iran.
• Iranian military representatives claim that Israel acted with US backing. However, US diplomat Marco Rubio stated that the US was not involved, emphasizing that Israel deemed the strike necessary for self-defense.
• Iran’s Supreme Leader, Ayatollah Ali Khamenei, responded by threatening severe repercussions for Israel, warning that the attack may provoke a wider conflict in the region.
• On trade issues, US President Donald Trump has extended a 50% steel tariff to several household appliances. Meanwhile, U.S. Secretary of Commerce Howard Lutnick confirmed that tariffs on Chinese imports remain unchanged at 55%.
• The U.S. Bureau of Labor Statistics indicated stagnation in producer price indexes for May, with a slight uptick of 0.1% compared to a revised decline of 0.2% in April, implying further possible easing by the Federal Reserve.
• Traders are now focusing on upcoming inflation expectations linked to Michigan’s Consumer Sentiment Index, but primary attention remains on Trump’s trade policies and the situation in the Middle East.

Technical Outlook Suggests Potential for Further Gold Price Increases

From a technical perspective, recent highs align with an upward trend channel, indicating short-term upward momentum for gold prices. With oscillators positioned in bullish territory on daily charts, the potential to challenge the previous peak around the $3,500 psychological mark from April seems plausible. This level also coincides with the top boundary of the ascending channel, which could trigger increased buying interest if surpassed.

If a pullback occurs, it might present a buying opportunity, with support anticipated near the $3,400 mark. However, a decline below $3,385 might indicate further losses towards intermediate support around $3,355 and potentially heading down to $3,330-3,329, marking the channel’s lower edge. A definitive break beneath that level would shift the short-term outlook toward bearish traders.