Gold surge on Middle East conflict and Fed uncertainty

Tensions in the Middle East are driving Gold's rise. Iran and Israel are exchanging attacks. Rising conflict prompts traders to seek gold as a haven. Fed policy also plays a key role. Traders expect a rate cut if US inflation drops and growth weakens. Lower borrowing costs typically undermine the US Dollar and boost Gold's appeal. Uncertainty from President Trump's trade policy adds pressure. All these factors are contributing to the rise in Gold's price and shaping its future direction.

Middle East conflict and Fed policy drive Gold prices higher

The primary driver of Gold's rise is growing tensions in the Middle East. Iran and Israel continue their conflict. Iran fired a new barrage of missiles and drones at Israel on Sunday evening. Israel responded quickly with attacks on Iran's military sites. Rising tensions often prompt traders to turn to gold. It is a non-yielding asset, a safe place to put their money during uncertain times.

This comes alongside persistent questions about Fed policy. The Fed is expected to keep interest rates on hold during its policy meeting this Wednesday. However, traders are pricing in a future rate cut. They expect borrowing costs to drop if US inflation falls and the economic outlook weakens. Lower borrowing costs typically undermine the US Dollar and boost Gold prices. The weakening of the Dollar makes Gold cheaper for buyers in other currencies.

Additionally, President Trump's ongoing trade policy worries add to market nervousness. His actions raise doubts about future growth and stability. That uncertainty makes Gold more desirable. Meanwhile, the US dollar attempted to stabilise after reaching a three-year low on Friday. Nonetheless, traders remained cautious. Few are willing to buy the greenback aggressively. The Fed's policy signals and geopolitical tensions will continue to influence Gold's direction in the days ahead.

The fundamental backdrop favours Gold. Rising geopolitical risks, doubts about future Fed policy, and growing economic uncertainty all add upward pressure on the metal's price. Gold will remain supported as long as these factors stay in play.

Technical analysis: Gold breaks key resistance, signalling sustained uptrend above $3,400

The gold chart below shows the upward momentum, highlighting a clear pattern of higher lows. Each drop finds support above the previous low. This signals intense buying pressure and an uptrend in progress.

The price has crossed a descending trendline, adding confirmation to the upward move. Gold broke through resistance and sustained its momentum above $3,400. It now trades at $3,432.83. The next key resistance level is $3,500. That area may act as a barrier to further gains.

A series of small "rounded bottoms" marked in red on the chart supports this view. Each bottom reflects buying pressure and signals a reversal of short-selling momentum. The overall pattern suggests that Gold may continue its upward trajectory if buying pressure holds. Furthermore, the technical signals align with the fundamental view. Rising geopolitical tensions and signals from the Fed help maintain strong momentum.

Conclusion

In conclusion, Gold is poised to move higher. Rising Middle East tensions, doubts about Fed policy, and ongoing US-China trade worries all boost its appeal. The technical picture shows intense buying pressure and upward momentum. Gold will remain supported in the near term, as long as these factors stay in place. Market participants will closely watch Wednesday's Fed meeting. It may provide additional signals for Gold's future direction. Nonetheless, the combination of fundamentals and technicals suggests the path of least resistance for Gold is upward.

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