Gold (XAU/USD) remains firm close to its monthly peak ahead of Monday’s European session and attempts to extend last week’s breakout above the $5,100 level, supported by favorable fundamentals. Fresh trade tensions and escalating Middle East risks continue to boost demand for the safe-haven metal and reinforce the positive outlook.
US President Donald Trump unveiled a new trade framework after a Supreme Court ruling blocked his sweeping tariffs, introducing a global 15% import levy — the highest permitted under current law. The move raised fears of retaliation and supply-chain disruptions, hurting market sentiment and increasing demand for Gold as a defensive asset.
Data released on Friday showed the US Personal Consumption Expenditures (PCE) Price Index rose 2.9% year-on-year in December, while the core reading — excluding food and energy — climbed 3.0%. The figures strengthened expectations that the Federal Reserve is unlikely to cut interest rates in March, though markets still anticipate two 25-basis-point cuts later this year.
Those expectations gained traction after weak US growth data revealed the economy expanded at a 1.4% annualized rate in the fourth quarter, sharply slowing from 4.4% in Q3 during the longest government shutdown on record. Combined with trade uncertainty, this pulled the US Dollar away from its recent highs and provided additional support to the non-yielding metal.
Tensions between the US and Iran also contributed to the rally. Officials from both countries are expected to meet in Geneva following Iran’s nuclear proposal, while reports indicate the US administration is weighing military options if diplomacy fails, adding another layer of geopolitical risk that favors Gold.
Technical outlook: bullish bias remains intact
Technically, the strong upside follow-through at the start of the week confirms Friday’s break above the $5,100 resistance zone and keeps buyers in control. The Moving Average Convergence Divergence (MACD) remains above both the signal line and the zero level, with a widening positive histogram indicating strengthening upward momentum.
Gold is also trading above a rising 200-period Exponential Moving Average (EMA), which supports the short-term bullish structure. However, the Relative Strength Index (RSI) near 73 signals overbought conditions and may limit immediate upside progress.
As long as prices hold above the 200-period EMA around $4,864, the broader upward trend remains intact and any dips could attract buyers. Momentum would start to ease if the MACD histogram contracts, and the elevated RSI suggests a period of consolidation or mild pullback may occur before the next leg higher.
