Photo by Dmitry Demidko on Unsplash

Gold (XAUUSD) is holding firm despite a slight pullback from recent highs. Rising geopolitical tensions are driving safe-haven demand and keeping gold in focus. Russia’s naval deployment near Venezuela and China’s export restrictions on Japan have added to global uncertainty. At the same time, markets are watching the Federal Reserve’s divided stance on rate cuts and continued Dollar weakness. With key economic data approaching, gold remains supported by both macro risks and policy signals.

Gold Edges Lower from Highs as Geopolitical Risks and Dollar Weakness Support Demand

Gold has pulled back slightly from recent highs as geopolitical risks intensify and safe-haven demand remains strong. Russia's deployment of submarines to protect an aging oil tanker off Venezuela’s coast highlights the growing risks in key strategic regions. At the same time, China’s decision to restrict exports to Japan adds another layer of friction, especially following remarks on Taiwan by Japan’s Prime Minister. These developments are raising global uncertainty and keeping gold in focus as a defensive asset.

On the policy front, the Federal Reserve’s latest meeting minutes revealed a split view among officials. Most agreed that further rate cuts are appropriate if inflation continues to decline. However, there was less clarity on the timing and size of those potential cuts. This uncertainty has led markets to anticipate a dovish tilt, supporting non-yielding assets like gold as real yields move lower.

Additionally, continued weakness in the U.S. Dollar is supporting gold prices. Despite a brief retracement, the broader downtrend in the Dollar persists as Treasury yields fall. With Fed funds futures showing an 82% probability of no change in rates at the upcoming meeting, gold continues to benefit. Markets are now focused on key data releases, particularly the ISM Services PMI and Friday’s employment report, for further confirmation of policy direction.

Gold Holds above Key Trendline within Bullish Broadening Wedge Structure

The gold chart below shows a clear ascending broadening wedge pattern. This structure began forming in early September and guided gold’s sharp rise toward the $4,500 zone. The pattern highlights expanding volatility within a bullish framework, with higher highs and higher lows validating upward momentum. This setup reflects a strong but widening trend, suggesting continued strength while signaling potential for sharp moves in either direction.

(Click on image to enlarge)

Gold retraced after its strong climb but held above the lower wedge support. The trendline provided dynamic support throughout November and December. Each dip attracted renewed buying interest, highlighting the strength of the broader uptrend. This sustained pattern of higher lows signals continued confidence in the bullish structure.

Currently, gold continues to trade above the rising support line, maintaining its bullish structure. Despite recent pullbacks, the structure remains bullish. The consolidation within the wedge suggests that price is building energy for the next move. A sustained break above $4,500 could open the door toward higher targets, while support near $4,350–$4,370 remains key for maintaining bullish momentum.

Conclusion: Gold Remains Supported by Technical Strength and Macro Drivers

Gold has pulled back from recent highs, but key support levels remain intact. Ongoing geopolitical risks and policy uncertainty continue to drive safe-haven demand, keeping gold in focus. Dovish signals from the Fed, alongside a weaker Dollar and declining yields, continue to support gold’s broader upside. Technically, the metal continues to hold above the lower wedge trendline, signaling strength despite short-term consolidation. As markets await key economic data, gold remains well-positioned to resume its upward move if conditions align.

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