Gold hits new highs as investors hedge against global instability

Muhammad Umair, PhD Gold Predictors

Gold prices continue to rise as investors seek safe-haven assets amid global tensions. The ongoing geopolitical crisis in the Middle East and economic uncertainties in the US are fueling demand for gold. As the Federal Reserve’s policy decision looms, traders are closely watching market movements.

Geopolitical tensions and US economic concerns drive investors to gold

Gold capitalizes on heightened geopolitical risks as tensions in the Middle East escalate. A ceasefire between Israel and Hamas collapsed after Israeli airstrikes hit Gaza, leading to significant casualties. Hamas rejected a proposal to release hostages, adding to the uncertainty. Reports of US forces sinking an Iranian intelligence-gathering ship further stoked fears of broader conflict. These developments have increased the safe-haven demand for gold. Investors are hedging against global instability.

Economic uncertainties in the US also support gold prices. The White House reaffirmed that reciprocal tariffs will go into effect on April 2, potentially impacting global trade. Additionally, US retail sales for February rose only 0.2%, missing the expected 0.7% growth. This weak economic data raises concerns about a slowdown, making gold an attractive investment. Meanwhile, the US dollar remains volatile. Traders are shifting their focus to the Federal Reserve’s policy decisions, which could influence gold’s next move.

Gold breaches the key levels

The chart below shows a clear uptrend within an ascending channel. The price has been steadily rising, forming higher highs and higher lows. This channel acts as a strong support and resistance framework, guiding gold’s movement. A key technical pattern on the chart is a double-bottom formation, a typically bullish signal, which emerged around the $2,340 level. This pattern confirmed strong support and triggered a breakout toward higher levels.

Another critical level is the $3,000 resistance zone. The price is testing this level, and a confirmed breakout could drive another strong upward move. The ongoing bullish trend and price action indicate sustained upward momentum. If gold remains within the ascending channel, the uptrend is likely to continue. However, a drop below $2,800 could signal a trend reversal.

Conclusion

Gold prices remain strong and extending the rally above the overbought levels. The heightened geopolitical tensions in the Middle East and global trade crisis are the main catalyst behind the latest surge. The breakdown of the ceasefire between Israel and Hamas has intensified market uncertainty. Additionally, rising friction involving the US, Iran, and the Houthis has boosted demand for safe-haven assets. Concerns over a slowing US economy and upcoming Federal Reserve policy decisions further contribute to market volatility. As investors seek stability, gold prices may sustain their upward momentum in the short term.

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Author

Muhammad Umair, PhD

Gold Predictors

Muhammad Umair is a financial markets analyst and investor who focuses on the forex and precious metals markets.

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