Gold News: Can Geopolitical Tensions Sustain the Rally Next Week?

Gold Hits Record High as Geopolitical Risks and Rate Cuts Drive Demand

Last week, gold surged to a new all-time high, surpassing $2700 for the first time, driven by intensifying global uncertainties and expectations of continued monetary easing. Safe-haven demand spiked as investors flocked to gold amid a volatile geopolitical and economic landscape.

Last week, XAU/USD settled at $2721.90, up $64.72 or +2.44%.

Middle East Conflict Fuels Safe-Haven Demand

The ongoing conflict in the Middle East, particularly between Israel and Hezbollah, was a key driver behind gold’s rally. As Hezbollah escalated its military involvement, the region’s instability deepened, prompting investors to seek the safety of gold. The lack of resolution in the conflict and heightened geopolitical risk pushed gold to new highs, with prices hitting a record $2722.65 on Friday​​.

Central Bank Easing Supports Gold’s Rally

Expectations of continued monetary easing also played a major role in last week’s rally. The Federal Reserve is widely anticipated to cut rates in November, with markets pricing in a 92% chance of a 25-basis-point reduction​. Looser monetary policies tend to make non-yielding assets like gold more attractive as they reduce the opportunity cost of holding bullion.

Adding to the bullish momentum, the European Central Bank (ECB) delivered its third rate cut of the year, with further easing expected, strengthening the demand for gold as a hedge against uncertain economic conditions​.

Economic Data Presents Mixed Signals

Despite the bullish momentum in gold, U.S. economic data painted a mixed picture. Retail sales increased by 0.4% in September, exceeding forecasts and indicating continued resilience in consumer spending​​. However, the housing market showed weakness, with housing starts and building permits falling, adding to speculation that the Federal Reserve will maintain its dovish stance. This combination of strong consumption and softer housing metrics is expected to support gold as investors remain cautious about the broader economic outlook.

Geopolitical and Economic Uncertainty Keep Gold in Focus

In addition to geopolitical risks, investors are closely watching the upcoming U.S. presidential election, which has further fueled market uncertainty. Safe-haven assets like gold remain in focus, with analysts projecting further price increases in the near term. According to market forecasts, gold could rise to $3000 per ounce within the next 6 to 12 months, driven by both geopolitical and economic factors​​.

Forecast for Next Week

After hitting its new all-time high, gold is expected to continue its bullish trend, supported by ongoing geopolitical tensions and expectations of monetary easing. While some profit-taking may occur in the short term, the broader outlook remains positive, with strong demand likely to persist.

Key factors to watch include any developments in the Middle East conflict and U.S. economic data, both of which could push prices higher. Gold could test resistance around $2750 in the coming days, with further upside potential if safe-haven demand remains strong​​.