The price of gold rose to $3,303 per troy ounce on Wednesday, nearing a two-week high. The precious metal gained for the third consecutive day, following a 2% surge the previous day as investors sought safety amid heightened geopolitical uncertainty.
Key drivers behind the rally
Middle East Tensions: fears of escalation increased over a potential Israeli strike on Iran’s nuclear facilities, which could trigger retaliatory measures from Tehran.
US Political Uncertainty: President Donald Trump’s remarks on peace talks between Russia and Ukraine added to market unease, though he distanced himself from a mediating role.
Dollar Weakness: the US dollar remained under pressure after the Federal Reserve’s cautious economic outlook and Moody’s downgrade of the US credit rating, citing rising government debt.
Trade & Fiscal Policy: investor confidence in the dollar was further dented by uncertainty over trade tariffs and the pending vote on Trump’s proposed tax reforms.
As a result, the dollar’s weakness has made gold more attractive to international buyers.
Technical analysis: XAU/USD
H4 Chart:
- The market consolidated near 3,222 before breaking upward
- The immediate upside target of 3,312 has now been met
- A pullback to retest 3,222 (from above) is likely, followed by a potential rise towards 3,333
- MACD Indicator: The signal line remains above zero and points upward, supporting further gains
H1 Chart:
- The pair broke through 3,250 and continued its upward trajectory towards 3,333
- A short-term correction to 3,222 is expected before another push higher
- The current uptrend is viewed as corrective; once complete, a downward wave towards 3,222 may follow
- Stochastic Oscillator: The signal line is below 80 and trending downward towards 20, indicating potential near-term weakness
Conclusion
Gold’s rally reflects its role as a haven amid geopolitical risks and dollar softness. While technical indicators point to a temporary correction, the broader uptrend remains intact, with 3,333 as the next key resistance level.
