Gold prices rebounded in early Asian trade on Friday, holding firm above the key $3,300 level. The precious metal is now on track for its best weekly performance in more than a month, driven by a combination of macroeconomic concerns and global geopolitical uncertainty.
Despite a brief respite on Thursday following stronger-than-expected US economic data, investors’ focus quickly returned to larger fundamentals including the worsening US fiscal situation, renewed US-China trade tensions, and growing geopolitical concerns.
These factors have eroded confidence in risk assets and provided renewed support for gold as a key safe-haven asset amid heightened uncertainty.
Dollar Weakens, Gold Shines Brighter
The US dollar failed to sustain gains after strong data, as traders began to price in expectations of policy easing by the Federal Reserve (Fed).
Markets are now expecting at least two more rate cuts by the end of the year, a scenario that would put pressure on real yields and make gold, which does not offer a yield, more attractive.
While economic data has shown signs of strength, such as weekly jobless claims falling to 227,000 and the manufacturing and services PMI readings rising to their highest levels in months, investors remain more focused on structural fiscal risks and heightened political uncertainty.
Budget and Geopolitical Concerns Drive Safe-haven Demand
Markets remained jittery after the US House of Representatives passed President Donald Trump’s massive tax and spending bill, a package that is expected to add about US$3.8 trillion to the federal deficit over the next decade.
With Senate approval still uncertain, many investors are concerned about the long-term resilience of the US financial system.
Meanwhile, geopolitical tensions have risen again. Reports say Russian President Vladimir Putin remains adamant about continuing the war in Ukraine, while the assassination of two Israeli diplomats in the US has added to global jitters.
This development comes amid increasingly shaky nuclear talks and the re-escalating US-China trade dispute.
All of this is seen as pushing investors back to safe haven assets such as gold and the Japanese yen.
Key Price Levels: Still Positive Signals for ‘Buy on Dips’
From a technical perspective, the gold price movement pattern is still showing an upward trend. The nearest support level is expected to be in the $3,260 to $3,258 zone, a key area that has successfully withstood recent selling pressure.
If the price falls beyond this level, it could open up space to lower levels around $3,232 and then $3,200.
On the upside, the main obstacle is at $3,320 to $3,325, followed by the previous high around $3,346.
If the price manages to break through this zone, further upside potential could take gold towards $3,363–$3,365 and possibly reach the psychologically important $3,400 level. Stability above this level will further strengthen bullish sentiment in the near term.
SARACEN MARKETS View: Gold Still the Best Path Amidst Uncertainty
For traders, any short-term weakness in gold prices should be viewed as an opportunity to take long positions, especially when other risk assets remain vulnerable to market shocks.
The combination of worsening US fiscal pressures, lingering geopolitical tensions, and dovish signals from the Fed means gold remains the asset of choice in this volatile market environment. Remain cautious. Build positions strategically.
