XAU/USD, the trading symbol for gold against the US dollar, is poised to build on recent gains. It was sitting around the $3,370 mark at press time. This increase is the largest in four weeks. Market participants appear to be reacting to the combination of escalating geopolitical tensions and a weakening US dollar. The 4-hour chart shows a distinct bullish trend over the last couple of weeks, with bullish price action likely to continue in the short term.
Recent market developments have combined to create this very positive outlook. New geopolitical conflicts and economic uncertainties have led to an unprecedented rise in demand for gold. There’s an increased demand as global citizens seek refuge in this traditional safe-haven asset. More recently, Ukraine’s drone attack on Russian strategic bombers has sparked a new wave of panic among global markets. Consequently, investors are fleeing to gold for safety. Imposing tariffs to protect American jobs has been embraced by politicians of both parties, including former President Donald Trump. This move has stirred up more tensions with Beijing and soured investor sentiment further.
Technical Analysis of XAU/USD
Technical analysis XAU/USD finds itself in a clearly bullish formation, the price trading above all its moving averages along with increasing upward momentum. Its 20 Simple Moving Average (SMA) is at $3,296.00 which has proven to be a strong support. The 20 SMA is picking up positive upside pressure. It hovers over the longer-term 100 and 200 SMAs, which are located lower in the price range.
XAU/USD performing well and continued to push overall gains into the $3,370 area. It’s shooting for much higher highs. Buyers have been on offense defending the downside around the 20 SMA. That intense demand is helping to keep the market climbing. XAU/USD technical indicators are widely entrenched in bullish territory, indicative of highly developed bullish momentum.
Key downside supports for XAU/USD remain $3,380.10, $3,397.90, and $3,414.65. On the other hand, resistance is shown at $3,363.40, $3,344.60, and $3,325.70. These new highs and new lows will be a key focus for traders as they make their way through this dynamic market ecosystem.
Market Influences and Geopolitical Concerns
Gold prices have reached all-time highs in recent weeks. That increase is largely due to deteriorating market sentiment aggravated by geopolitical tensions and economic indicators. The ISM report highlighted that “economic activity in the manufacturing sector contracted in May for the third consecutive month,” reflecting ongoing economic concerns that are influencing investor behavior.
In fact, geopolitical tensions remain an important factor in overall market influence. Ukraine’s new drone strike against Russian airfields was yet another escalation that rattled investors’ faith in regional stability and caused a safe-haven flight into gold. Tensions in foreign affairs are often precursors to increased volatility in global capital markets. Because of their negative correlation, gold is a popular safe haven for investors during uncertain times.
Now throw in geopolitical relations, as well as Trump’s tariff intentions to protect American manufacturing, and his administration has certainly deepened the Chimerican rub. The brewing trade war between the U.S. and China – now two of the world’s three largest economies – continues to make market conditions more difficult. Consequently, bringers are recalibrating their risk appetite and can increase their debt in gold.