Highlights:
- Gold climbs above $4,700 to new record highs
- Trade war fears between the US and Europe boost safe-haven demand
- Russia-Ukraine conflict continues to support gold prices
- Weaker US Dollar adds strength to the gold rally
- Traders await US PCE inflation data for policy clues
Gold prices continue to rise sharply, reaching fresh all-time highs on Tuesday (20) as investors seek safety amid growing global uncertainty. The precious metal climbed above USD 4,700 per ounce, supported by strong demand for safe-haven assets. Concerns about geopolitical conflicts, trade tensions, and a softer US Dollar are all driving the latest rally.
One of the key factors behind gold’s strength is the ongoing Russia-Ukraine war. Recent attacks on Ukraine’s energy infrastructure have kept geopolitical risks high. Overnight drone and missile strikes caused power outages across the country, while further attacks were reported in Kyiv. These developments have reminded investors that the conflict remains far from resolved, increasing demand for gold as a protective asset.
At the same time, fears of a potential trade war between the United States and Europe are adding to market uncertainty. US president Donald Trump has threatened to impose an additional 10 per cent tariff on goods imported from several European countries starting February 1. These threats are linked to tensions over Greenland, which have raised political and economic concerns. In response, France has suggested possible countermeasures, increasing the risk of a broader US-EU trade conflict.
Gold is also benefiting from weakness in the US Dollar. Trump’s renewed tariff threats have revived what markets describe as the “Sell America” trade, putting pressure on the dollar. Since gold is priced in US Dollars, a weaker currency makes it cheaper for foreign buyers, further supporting prices.
Meanwhile, expectations around US monetary policy remain mixed. Traders have reduced their bets on aggressive interest rate cuts by the Federal Reserve in 2026. This followed comments from Trump suggesting he may keep current National Economic Council Director Kevin Hassett in his role, raising uncertainty over who will replace outgoing Fed Chair Jerome Powell. Despite this, the US Dollar has failed to gain strength, allowing gold to continue its upward move.
From a technical perspective, gold remains in a strong uptrend. Prices have broken above the upper boundary of an ascending price channel that began near USD 3,845. Momentum indicators such as the MACD remain positive, showing that buyers are still in control. However, the Relative Strength Index (RSI) is near 71, which signals overbought conditions. This suggests that while the trend remains bullish, some short-term consolidation or pullback cannot be ruled out.
Looking ahead, investors are likely to be cautious before placing new bets. The upcoming release of the US Personal Consumption Expenditure (PCE) Price Index on Thursday will be closely watched. As the Federal Reserve’s preferred inflation measure, it could offer important clues about future interest rate decisions, which may influence gold’s next move.
For now, gold’s rally remains strong, driven by uncertainty, geopolitical risks, and a softer dollar, keeping the safe-haven metal firmly in favor.
