Written by: Rania Gule, Senior Market Analyst at XS.com – MENA
Recent movements in the gold market near $4,472 indicate that the yellow metal is entering a delicate phase, combining strong support from fundamental factors with heightened sensitivity to upcoming economic data—most notably the U.S. Non-Farm Payrolls report. In my view, gold’s ability to trade near a one-week high is not merely a temporary or technical move, but rather a reflection of deeper concerns and uncertainty dominating the global economic and geopolitical landscape—an environment that has historically been favorable for higher gold prices.
I believe the current positive momentum in gold is primarily driven by escalating geopolitical risks on multiple fronts simultaneously, a factor markets cannot ignore. U.S. military threats toward Venezuela, warnings directed at several Latin American countries, open political tensions between Saudi Arabia and the UAE, and the ongoing Russia–Ukraine war with no clear resolution all contribute to sustained demand for safe-haven assets. In my opinion, when such crises accumulate at the same time, investors tend to reduce exposure to high-risk assets and seek value-preserving instruments, with gold remaining at the forefront of these choices.
At the same time, gold’s strong performance cannot be separated from developments in U.S. monetary policy. Growing market expectations of a more dovish Federal Reserve represent a key pillar supporting the ongoing uptrend. Expectations for two additional interest rate cuts this year reflect increasing conviction that the U.S. economy, despite showing some resilience, still requires monetary support. As long as these expectations persist, I believe gold will remain a primary beneficiary, given that it is a non-yielding asset typically pressured by higher interest rates.
Recent weakness in the U.S. dollar further reinforces this outlook. The dollar’s retreat from multi-week highs is not merely a technical correction, but a direct result of shifting investor expectations regarding the future path of monetary policy. Mixed U.S. PMI data support this scenario, with S&P Global PMI signaling continued expansion, while the ISM manufacturing index confirms that the sector remains in contraction. In my view, this divergence places the Federal Reserve in a cautious position, discouraging further tightening—thereby weighing on the dollar and supporting gold simultaneously.
Another factor I consider influential, albeit not yet fully priced into the market, is the ongoing debate surrounding the Federal Reserve’s independence under the current U.S. administration. Any doubts regarding central bank independence introduce monetary uncertainty, prompting investors to hedge through gold. Historically, increased political pressure on monetary policymakers has enhanced gold’s appeal as a hedge against declining confidence in economic governance.
That said, the current phase is not without risks for gold buyers, particularly in the short term. The upcoming U.S. Non-Farm Payrolls report represents a critical test for the prevailing trend. Should the data come in stronger than expected and signal robust labor market conditions, we may see a temporary rebound in the dollar accompanied by corrective pressure on gold. In my assessment, such a scenario would not alter the broader bullish trend, but could generate sharp volatility and repositioning opportunities for investors.
Conversely, if the jobs data meets expectations or comes in weaker, this would reinforce bets on a March rate cut and push gold toward testing higher levels in the coming weeks. I believe the market has become highly sensitive to any signals confirming a slowdown in the U.S. economy, with gold standing to benefit first from any shift in sentiment.
Based on all these factors, I maintain a cautiously optimistic outlook for gold prices in the near term. The current environment—marked by rising geopolitical risks, accommodative monetary policy expectations, and sustained pressure on the dollar—forms a supportive backdrop for continued upside. Nevertheless, investors must closely monitor economic data and remain mindful of potential corrections, as gold, despite its strength, remains vulnerable to sharp volatility during key data-driven periods. In my view, any pullback is likely to present a buying opportunity as long as the underlying fundamental drivers behind this rally remain intact.
