Gold Soars on Fed Cuts and Geopolitical Heat

Key Takeaways:

*Fed easing cycle and lower yields have fueled gold’s historic surge above $3,700, with the dollar sliding to multi-month lows.

*Safe-haven demand intensifies amid Ukraine conflict, U.S.–China tensions, and political friction inside the Fed.

*Central bank buying, led by the PBoC, anchors long-term demand, while momentum and technical amplify upside risks.

Market Summary:

Gold’s historic surge past $3,700 per ounce marks a defining moment for financial markets in 2025, driven by a rare alignment of monetary, geopolitical, and structural forces. The immediate catalyst is the Federal Reserve’s expected 25-basis-point cut, part of a broader easing cycle that markets expect could deliver up to 125–150 basis points of cuts by 2026. Lower yields and a softer dollar have drastically reduced the opportunity cost of holding gold, amplifying demand and accelerating bullion’s upward momentum.

Safe-haven demand has provided an equally powerful tailwind. Escalating drone attacks on Russian energy infrastructure, persistent U.S.–China trade tensions, and political frictions within the Federal Reserve itself have spurred capital into gold as investors seek shelter from volatility. This is occurring against a backdrop of fragile global growth, with slowing trade activity in Asia and rising geopolitical fragmentation reinforcing the appeal of bullion as a hedge against uncertainty.

Structural demand from central banks has further entrenched the rally. The People’s Bank of China added 1.9 tonnes of gold in August, its tenth consecutive monthly purchase, extending a global trend of reserve diversification away from U.S. Treasuries. This steady, non-speculative demand provides a firm base for prices and signals a deeper shift toward de-dollarization in global reserve management. In effect, central banks have become a stabilizing buyer of last resort, cushioning corrections and emboldening long-term bulls.

Momentum has compounded these fundamental drivers. Gold’s 41% year-to-date gain outpaces all major equity benchmarks, and speculative positioning in futures markets has surged to multi-year highs. Analysts from UBS and Goldman Sachs have upgraded targets, with some scenarios pointing toward $5,000 an ounce if even a fraction of institutional capital reallocates from bonds into bullion. While near-term risks of profit-taking remain if the Fed’s tone is less dovish than markets expect, the long-term setup remains favorable. Monetary easing, de-dollarization, and entrenched geopolitical risks combine to anchor gold’s role as the premier safe-haven asset of this cycle.

Technical Analysis 

XAUUSD, H4

XAUUSD continues to hold near the 0.786 Fibonacci level at $3,693 after a strong rally within the ascending channel. Price action shows consolidation just below this key resistance, with buyers still defending the midline of the channel. A close above $3,693 would confirm bullish continuation toward $3,806, while a rejection here could trigger a pullback toward the 0.618 retracement at $3,604 and the channel’s lower boundary.

Momentum indicators show mixed signals. RSI has eased to 59 after briefly touching overbought conditions, signaling cooling momentum without yet breaking bullish structure. The MACD remains above the zero line, but the histogram is flattening, suggesting fading upside momentum and the risk of near-term consolidation.

Overall, gold remains in a strong uptrend but is testing heavy resistance. A breakout above $3,693 would open the path for further highs, while failure to clear could lead to a corrective dip back toward $3,600. Traders should monitor whether momentum reignites or stalls at this level.

Resistance level: 3693.00, 3806.00

Support level: 3604.00, 3541.00