By Abdelaziz Albogdady, Market Research & Fintech Strategy Manager at FXEM
Gold held near the USD 5,200 level on Thursday, hovering close to its highest level this month. The metal could continue to react to uncertainty around US trade policy developments, monetary policy direction, and global geopolitical tensions.
Continuing tensions in Eastern Europe and the Middle East fuel risk aversion and could direct investment flows toward the yellow metal. The build-up in US military assets in the Middle East amid another leg of talks, alongside additional sanctions targeting Iran, has heightened uncertainty. At the same time, the US commitment to broad-based tariffs has revived trade concerns, reinforcing gold’s appeal.
However, monetary policy dynamics could act as a counterbalance. Persistent inflation risks and a cautious Federal Reserve rhetoric could weigh on rate-cut expectations, tempering upside momentum in non-yielding assets.
Looking ahead, gold’s direction will hinge on new economic data on jobs and inflation, in addition to new trade policy and geopolitical developments. Further escalation could catalyse renewed volatility and propel prices higher, while tangible diplomatic progress may prompt consolidation or correction.