Gold Soars To 2-Month High As Middle East Tensions And Fed Signals Boost Demand

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Gold prices are on the rise again. Middle East tensions and Fed signals drive the move up. Investor sentiment declined as stocks fell and policy risks increased. Gold jumped to its highest level since April 22. Weak US data and tariff hikes add to its appeal. The yellow metal shines as a haven in uncertain times. The technical view also supports its upward momentum. Gold may continue to climb toward $3,500 in the coming days.
 

Gold Prices Surge amid Middle East Conflict and Fed Rate Cut Expectations

The main driver for the rise in gold is growing geopolitical risk. Israel launched airstrikes against Iran's nuclear and military sites. Iran responded by threatening severe punishment against Israel. The attack raised worries about a wider Middle East war. Investor sentiment fell as stocks dipped across the globe. Gold, a well-known safe-haven, jumped to its highest level since April 22.

Meanwhile, the Fed is expected to cut borrowing costs further in 2025. Rising tensions and weak US economic data supported this view. The Producer Price Index remained weak in May. The Consumer Price Index also rose less than expected. These signals led traders to believe that the Fed might ease its policy to support growth. Lower borrowing costs typically undermine the US dollar and bond yields. That makes non-yielding gold more attractive to investors.

Meanwhile, US President Trump raised tariff rates on a range of products. His move kept the tariff rate at 55%. Importantly, this policy signals growing policy uncertainty. Rising policy risks often lead to increased buying of hard assets, such as gold. Furthermore, the University of Michigan's Consumer Sentiment Index is scheduled for release soon. It may affect the Fed's future policy path and gold's direction in the short term.
 

Gold Technical Analysis Shows Rising Trend within Ascending Channel

The gold chart below shows a strong technical picture. The current price is trading above $3,400, comfortably positioned within an ascending channel. The upward slope of this channel signals ongoing momentum to the upside. Higher highs and higher lows reflect buying pressure.

This trend started in November 2023 and accelerated in 2024. Gold broke above its resistance at $2,000 and kept advancing. The upper boundary of the channel now points toward a potential resistance at $3,500. If buying pressure stays strong, the price may move toward this upper boundary in the future.

(Click on image to enlarge)

gold

 

Support comes from the lower boundary of the channel, which previously acted as a buying area. If the price drops, traders will watch this lower boundary for a reversal. So far, each dip toward this area has resulted in buying, reflecting strong demand. The candlestick formations show sustained upward momentum. The medium to long trend is undeniably bullish.

Meanwhile, a minor pullback might be beneficial. The price is close to the upper side of the channel. Some traders may take profits here. Nonetheless, the overall path of least resistance points upward. Gold may consolidate briefly before resuming its upward trajectory toward $3,500 in the coming days and weeks.
 

Conclusion

The outlook for gold remains strong. Rising Middle East tensions, weak US economic signals, and expectations of Fed policy all contribute to this view. The technical picture shows an upward trend supported by intense buying pressure. Gold is safely within its ascending price channel. It may consolidate briefly and then move toward the upper boundary near $3,500. Investor sentiment, policy signals, and technical momentum all suggest more gains for the yellow metal in the future. 


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Gold Prices Surge As Geopolitical Tensions And Weak US Inflation Drive Demand
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