Commodities
Gold safe haven demand rekindled amid trade and geopolitical uncertainty
Gold attracts fresh risk-off flows on geopolitical jitters and sustained trade uncertainty, with the dollar’s demise and central bank buying offering additional tailwinds. Yet, the recent US-China tariffs truce has improved sentiment, opening the door to price pullbacks.
Gold Analysis
Geopolitical jitters flared up this week, following a CNN report that Israel is preparing for a potential strike on Iran’s nuclear facilities [1]. Such action would undermine ongoing negotiations between Washington and Tehran, intensifying instability in an already volatile Middle East. Meanwhile, the war in Ukraine continues, despite President Trump’s stated intention to end it, reinforcing the climate of uncertainty and renewing the appeal of traditional safe havens like gold.
Despite recent optimism surrounding the US-China trade agreement, global economic uncertainty and fears of a slowdown persist. Tariffs remain significantly higher than before Trump’s return to the White House, and securing comprehensive trade deals will be a more complex and time-consuming endeavor.
The US economy, while showing signs of resilience, contracted in Q1 according to preliminary data, underscoring persistent risks. At the same time, both business and consumer sentiment continue to deteriorate amid sustained price pressures, keeping stagflation concerns alive. Moody’s recent downgrade of the US credit rating has further fuelled fears over budget deficits and public debt, offering an additional tailwind for the precious metal.
The US dollar has also become a key casualty of Trump’s tariff policies, compounding gold’s strength. The greenback has failed to benefit from rising yields, as US assets have lost some of their appeal—even as Wall Street stages a recovery. Central bank buying remains a major pillar of support for gold, with China’s central bank increasing its gold reserves for a sixth consecutive month in April, despite elevated prices.
After experiencing its worst week of the year, gold’s safe-haven appeal has been swiftly rekindled by mounting geopolitical and economic fears. Ongoing dollar weakness and sustained central bank purchases continue to support prices. The precious metal has climbed back above its EMA200, reinstating the bullish bias and keeping it on track for new all-time highs.
On the other hand, the rollback of various levies and the US-China tariffs truce – even if temporary - offer hope for more trade agreements and ease economic fears. The improved market sentiment - evident in Wall Street’s recovery - creates scope for pullbacks in gold prices. Daily closes below the EMA200 would shift the bias to the downside and could open the door for a decline below 3,120.
Source: www.tradingview.com
Senior Financial Editorial Writer
Nikos Tzabouras
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.