Gold (XAU/USD) extended its powerful rally on Tuesday, touching new all-time highs during the European session as investors continue to pile into the safe-haven metal. The uptrend, established over the past month, remains firmly supported by expectations of further US Federal Reserve rate cuts and mounting geopolitical risks.
The Fed’s dovish stance, signaling two more rate cuts before year-end, has been a key driver of bullion’s appeal. At the same time, the escalating Russia-Ukraine conflict and renewed Middle East tensions have amplified safe-haven flows. These factors outweighed a modest recovery in the US Dollar (USD) and a generally risk-on market mood, underscoring gold’s dominant bullish tone.
That said, the metal’s extremely overbought short-term technical conditions may deter fresh aggressive buying ahead of Fed Chair Jerome Powell’s speech later today, which could inject volatility into USD and gold markets.
Market movers: Gold rallies despite USD rebound
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Firming bets on additional Fed easing, with markets pricing policy rates below 3% by end-2026, have underpinned bullion.
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Powell reiterated last week that September’s cut was a “risk-management” move, stressing patience while monitoring inflation risks.
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Geopolitical tensions remain high: Russia and Ukraine traded accusations over deadly drone strikes on civilians, NATO reported repeated airspace violations, and Hamas escalated rocket attacks on Israel. Meanwhile, Washington has warned Israel against West Bank annexation.
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The USD pulled back from a one-week high overnight, offering additional support to gold.
Technical outlook: Breakout signals more upside
Gold’s decisive breakout above the $3,700 level marks a fresh bullish trigger. Despite overbought daily RSI readings, momentum favors further gains.
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Support levels: $3,726–3,725 (immediate), $3,700 (psychological), $3,686–3,685, and deeper at $3,651–3,650.
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Resistance levels: With no historical barriers above current prices, the path of least resistance remains to the upside.
Any corrective dips are likely to be viewed as fresh buying opportunities unless price action slips below the $3,650 zone, which could suggest bullish exhaustion.
