Gold News: Traders Position for Volatility as Fresh Safe-Haven Demand Looms

Political Risk and Trade Tensions Drive Safe-Haven Demand

Gold ended the week underpinned by strong safe-haven flows as political risk in the U.S. and global trade tensions deepened. While some profit-taking emerged late in the week, institutional appetite for bullion remains strong, supported by a weakening dollar, inflation uncertainty, and rising concern over the credibility of U.S. monetary policy.

Technically, the trend is up. A trade through last week’s high at $3357.78 will signal a resumption of the uptrend with no resistance in sight. Last week, investors bought strength. This strategy could continue this week, but if they switch to “buy the dip” then switch to the daily chart for support since the weekly chart support is at $3095.25. I don’t expect to see a nearly 10% correction.

Last week, XAU/USD settled at $3327.37, up $89.45 or +2.76%.

Fed Independence Under Scrutiny Amid Trump-Powell Clash

Market focus sharpened on political interference risks after former President Trump threatened to remove Federal Reserve Chair Jerome Powell. The clash has rattled investor confidence, reviving debate over central bank independence. Historically, similar tensions have driven demand for gold as a hedge against institutional instability. Legal questions over Powell’s tenure only add to market uncertainty.

Tariff Escalation Sparks Safe-Haven Rotation

The Biden and Trump administrations both appear intent on expanding tariff frameworks, with recent actions targeting critical mineral imports and strategic sectors such as semiconductors and pharmaceuticals. These moves have heightened geopolitical stress and raised inflation concerns. As trade relationships come under strain, investor preference continues to tilt toward safe-haven assets like gold.

Rate Policy Stalemate Reinforces Gold’s Appeal

The Federal Reserve remains cautious, with officials calling for more data before shifting policy. Still, markets are increasingly pricing in rate cuts, driven by signs of slowing growth and persistent inflation risks. Gold stands to benefit either way: easing policy reduces the opportunity cost of holding non-yielding assets, while delayed action in the face of inflation preserves gold’s role as a hedge.

Dollar Weakness and Central Bank Demand Add Tailwinds

Ongoing dollar softness continues to support international gold flows. At the same time, central bank demand remains robust, with new data showing rising gold purchases as reserve diversification strategies expand. This steady accumulation provides a strong underlying bid, reinforcing gold’s strategic position in global portfolios.

Market Forecast: Bullish Outlook Backed by Policy and Political Risk

The longer-term gold outlook remains bullish, anchored by fundamental drivers including political instability, trade uncertainty, dovish policy expectations, and sustained central bank buying. While short-term consolidation may occur, macro conditions continue to justify elevated demand. Unless there is a material easing in global tensions, gold is likely to stay well-supported as a core safe-haven asset.

More Information in our Economic Calendar.