Gold remains bullish, driven by rising geopolitical tensions, trade disputes, and expectations of US rate cuts. Central bank demand has slowed but stays supportive amid ongoing dollar diversification. Short-term pullbacks reflect shifting sentiment, but fiscal risks and a weaker dollar may renew haven demand. Gold could trend toward $3,600/oz by year-end.

Gold: Remain attractive

Gold continues to demonstrate resilience amid a complex global backdrop, with a combination of geopolitical tensions, trade disputes, and shifting monetary expectations reinforcing its role as a strategic hedge. Recent price action reflects renewed haven demand, driven in part by escalating geopolitical risks. Tensions between major economies have resurfaced following accusations of trade agreement violations and fresh tariff announcements on metals such as steel and aluminum. The threat of retaliatory measures from key trading partners has further heightened market anxiety. Meanwhile, in Eastern Europe, intensified military activity and the failure of peace negotiations have added to global instability, prompting investors to seek safety in gold.

At the same time, deteriorating US economic data has increased concerns over the growth outlook, prompting markets to double their expectations for Federal Reserve rate cuts—from 40 to 80 basis points. The resulting decline in real yields and a weaker US dollar have provided additional tailwinds for gold. Fiscal uncertainty is also playing a larger role. With growing attention on the US debt ceiling and potential market volatility over the summer, investors are once again turning to gold, which has historically outperformed during episodes of fiscal stress. There is also growing speculation that the central bank may intervene in the fixed income market if fiscal concerns escalate, which could further compress real yields and support gold prices.

Central banks, while moderating their pace of purchases, continue to be net buyers of gold. In April, they added a net 12 tonnes to global reserves—a slowdown compared to previous months but still consistent with a longer-term trend of accumulation. Year-to-date, central bank buying remains robust, with 244 tonnes added in the first quarter alone. Although the pace has softened, the uncertain macroeconomic environment and ongoing efforts to diversify away from the US dollar suggest that official sector demand will remain a key pillar of support for gold.

Overall, while gold may experience near-term consolidation, the underlying drivers remain supportive. Haven demand, macroeconomic uncertainty, central bank accumulation, and potential US dollar weakness all point to a structurally bullish outlook. Market participants widely expect gold to challenge higher levels, with some projections eyeing a move toward $3,600/oz by the end of 2025, as gold continues to serve as a critical hedge in an increasingly unstable global environment.

XAU/USD 4H

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