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Gold continues to gain ground as uncertainty grips global markets. The precious metal is holding near a two-week high, driven by mounting geopolitical concerns and a weaker US Dollar. While fundamental risks fuel demand for safety, technical charts confirm strong bullish momentum. This dual support signals further upside potential for gold in the near term.
 

Gold Gains Momentum on Fiscal Instability, Trade War Fears, and Fed Dovishness

The recent rally in gold prices finds strong roots in global macroeconomic instability. Concerns about the worsening US fiscal outlook are a major factor. The US House of Representatives has passed President Trump's tax and spending bill. Dubbed the “Big, Beautiful Bill,” it is set to add about $3.8 trillion to the national debt over the next decade. This raises fears of future economic strain and inflation, supporting gold as a hedge.

Meanwhile, tensions between the US and China are escalating again. Renewed trade disputes between the world’s two largest economies threaten global growth and increase investor caution. This geopolitical tension further strengthens gold’s appeal as a safe-haven asset.

The Federal Reserve’s monetary policy outlook also plays a significant role. Despite upbeat US data, markets still anticipate rate cuts. The Fed's dovish stance weakens the US Dollar and makes gold more attractive to global investors. Being a non-yielding asset, gold benefits when interest rates decline.

Economic data remains a mixed bag. The US reported a fall in weekly jobless claims to 227K, hinting at labor market resilience. S&P Global's May data also showed private sector recovery. Manufacturing and Services PMIs both rose above 52, suggesting economic growth. However, these positives haven't boosted the US Dollar significantly due to lingering rate-cut expectations.

Overall, the combination of fiscal concerns, trade tensions, and monetary policy uncertainty drives demand for gold. Safe-haven flows continue to dominate, overshadowing short-term positive data points.
 

Technical Analysis: Gold Breaks Out of Long-Term Channel, Signals Strong Bullish Momentum

The gold chart below shows a powerful bullish breakout. Gold traded within a well-defined ascending channel from 2018 to early 2024. This long-term structure indicated steady upside with periodic corrections. However, in early 2024, gold prices broke above the upper boundary of this channel — a key bullish signal.

The breakout occurred around the $2,100 level and was confirmed by a strong weekly close above the resistance. Since then, gold has entered a steeper ascending channel, highlighted in the chart. Prices have followed this new trend aggressively, reaching above $3,300.

(Click on image to enlarge)

The chart also shows inverted head-and-shoulders patterns before the breakout, supporting the bullish shift. These patterns often indicate trend reversals and confirm strong buying interest at each dip.

After the breakout, gold continued to make higher highs and higher lows, respecting the new channel's boundaries. The price is currently at the upper edge of the new ascending channel, suggesting strong momentum.

Volume and candle size also support the move, reflecting increased conviction among buyers. As long as gold remains within this steeper channel, the bullish trend remains intact. A pullback to the midline of the channel could provide new entry opportunities.
 

Conclusion

Gold’s rally remains firmly supported by both fundamental and technical factors. Persistent geopolitical tensions, fiscal uncertainty, and dovish monetary expectations continue to drive safe-haven demand. At the same time, a confirmed breakout from a long-term technical pattern signals strong bullish momentum. These combined forces keep gold on an upward path. As long as the current trends hold, gold is likely to see further gains in the near term. Investors may find strategic opportunities on pullbacks within the new ascending channel. 

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