Gold bets on optimism

XAU/USD

Key zone: 5,100.00-5,300.00

Buy: 5,250.00(after retesting the 5.150 level); target 5,450-5,500; StopLoss 5,150.00

Sell: 5,000.00(on strong negative fundamentals); target 4,750.00; StopLoss 5,100.00

Renewed concerns about a trade war, combined with escalating geopolitical tensions in the Middle East, have become key triggers for rising interest in gold as a safe-haven asset and have supported the formation of a new bullish scenario.

Following the U.S. Supreme Court’s decision against the controversial tariffs, Trump announced the introduction of a universal 15% import levy — the maximum level permitted under current law. As a result, panic over economic risks stemming from disruptions in global supply chains intensified, and investors once again began hedging with gold.

The precious metal is traditionally sensitive to political risks: gold futures climbed toward $5,171 per ounce, while the spot market targeted a test of the January high at $5,318.40.

It is crucial to distinguish between a price-driven catalyst and a mechanical one. In periods of stress, gold is supported not only by emotional factors but also by the structural response of market infrastructure — through changes in inventories, flows, and spreads.

According to the World Gold Council, tariff risks reinforce the flight-to-quality effect, accompanied by rising inventories on COMEX and shifts in logistics and premiums: physical metal moves closer to contract delivery venues.

• In fact, gold transformed from a classic hedge into a speculative asset back in 2022, when the freezing of Russia’s foreign exchange reserves triggered a large-scale shift toward de-dollarization. Central banks increased bullion purchases, raising the share of gold in reserves.
• After that, the XAUUSD rally took on an exponential character. At the same time, such rapid growth creates signs of a price bubble that will eventually require unwinding. So far, the market has been limited to a correction ahead of a potential new upward impulse.
• U.S. GDP for the fourth quarter came in at just 1.4% year-over-year, down from 4.4% in the third quarter, amid a record government shutdown. Combined with trade uncertainty, this puts pressure on the U.S. dollar and supports gold.
• Institutional investors assess the fundamental overvaluation of XAUUSD through the lens of real bond yields and U.S. dollar dynamics. Current levels appear the most overstretched since the gold rush of the 1970s.
• At present, the upward movement is largely supported by retail demand, while hedge funds and asset managers have reduced their net long positions in the metal to the lowest levels in more than a year.

And what Is the result?

The base short-term scenario remains a consolidation phase until new strong fundamental drivers emerge.

De-escalation in the Middle East, Federal Reserve indecision, and the resulting strengthening of the U.S. dollar could significantly limit upside potential. Conversely, escalation of conflict in Iran and rising recession risks in the U.S. economy would provide strong support for XAUUSD buyers.

A resumption of the upward trend with targets of $6,200–6,500 over the coming months appears realistic: demand for physical metal remains strong, the Fed may return to monetary easing, and gold continues to be viewed as a key instrument for hedging geopolitical risks.

The rally’s potential has not been fully realized. In an environment of excess liquidity and a disconnect between prices and fundamental benchmarks — including real Treasury yields and U.S. dollar dynamics — panicked markets may exhibit irrational behavior.

So we act wisely and avoid unnecessary risks.

Profits to y’all!