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Gold prices continue to draw attention amid a backdrop of global uncertainty and shifting economic signals. Recent price action has shown a recovery after a short-term dip, supported by safe-haven flows and a pullback in the US Dollar. Investors are increasingly looking to gold as the ultimate safe haven amid global instability. Central bank demand and geopolitical tensions are also adding to the bullish momentum. With inflation concerns persisting, gold remains a preferred hedge for many market participants.
 

Gold Price Rally Driven by Weak Dollar and Political Uncertainty

The surge in gold prices is not merely technical. Strong fundamental catalysts are pushing gold to new highs. The central reason is political pressure on the U.S. Federal Reserve. President Donald Trump has vocally criticized Fed Chairman Jerome Powell, accusing him of lowering rates under President Biden and now resisting similar cuts under Trump. This political pressure threatens the Fed’s independence, shaking market confidence.

The global market is reacting sharply. The U.S. Dollar Index (DXY) hit its lowest level since 2022. A weaker dollar typically supports gold prices, as gold becomes cheaper for holders of other currencies. Traders now fear that the Fed might be coerced into rate cuts, even if inflation remains sticky or economic data does not warrant easing.

Gold is increasingly viewed as the only “true” safe haven. Jefferies analysts stressed that U.S. Treasuries are no longer safe amid tariff risks, fiscal deficits, and political uncertainty. In contrast, gold remains independent of such risks, offering protection against currency depreciation, inflation, and geopolitical stress.
 

Technical Analysis: Gold Holds above Mid-Channel after Breakout

The daily chart for gold shows a clear ascending channel formation developing from late 2024 into mid-2025. Gold prices have consistently respected this bullish channel, bouncing off support and pushing higher. Each correction has formed higher lows, which is a strong bullish signal.

Several inverse head and shoulder patterns are visible within the channel, confirming bullish reversals. These patterns have successfully led to breakouts, propelling prices further upward. The momentum accelerated in April, with a strong breakout above $3,200.

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A red trend line indicates an extension above the channel in early May. Gold briefly surged beyond the upper channel boundary, reaching the record $3,500 level. This move marks a parabolic extension, typically followed by a short-term pullback or consolidation, which we are seeing now.

The current price of nearly $3,450 reflects some profit-taking and cooling momentum. However, gold remains above the midline of the channel, and any dips are still well supported. As long as the channel remains intact, the trend stays bullish.

Support zones are seen around $3,300 and $3,200, which align with previous consolidation areas and the lower channel trend line. A breakdown below the channel could signal a deeper correction, but so far, bulls remain firmly in control.
 

Conclusion

Gold (XAU/USD) rebounds after a brief dip, supported by renewed safe-haven demand driven by escalating geopolitical tensions and a softer US Dollar. A hawkish Fed stance and optimism around US trade talks may limit further upside. Traders remain cautious ahead of the upcoming global economic data. Market sentiment could shift quickly if diplomatic developments unfold. 

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