XAU/USD. Analysis and Forecast

[Ben Graham]

At the start of the new week, gold is setting a new all-time high amid rising geopolitical tensions, which have drawn investors toward safe-haven assets. At the time of writing, the metal is trading at around $4,437 per ounce, surpassing $4,381, the previous all-time high.

The precious metal is posting its strongest annual performance since 1979, gaining nearly 68% year-to-date. This rally is driven by the Federal Reserve's dovish stance, weakness in the U.S. dollar, record inflows into gold-backed ETFs, and steady gold purchases by central banks.

In the near term, the market is anticipating further easing of the Fed's monetary policy, as key indicators point to easing inflationary pressures and weakness in the U.S. labor market. Lower interest rates typically support assets such as gold.

Geopolitics remains a key focus, continuing to amplify market concerns. In the Middle East, tensions between Iran and Israel have escalated again. There is speculation that Tehran may use large-scale military exercises to disguise potential offensive actions. Israeli authorities have warned that Iran may also be restoring key uranium enrichment facilities that were struck by the United States in June. In this context, Israeli Prime Minister Benjamin Netanyahu is expected to brief U.S. President Donald Trump on possible options for renewed strikes on Iran's missile program.

In addition, relations between the United States and Venezuela are deteriorating. U.S. forces intercepted and pursued another oil tanker near Venezuelan waters. This followed the seizure of two vessels last week and came after Trump's order to impose a blockade on sanctioned Venezuelan oil tankers entering and leaving the country.

Meanwhile, peace talks aimed at resolving the conflict in Ukraine, held under U.S. leadership in Miami, delivered mixed results. Representatives from the United States, Europe, Ukraine, and Russia were present. Steve Witkoff described the meeting as productive and constructive, particularly regarding the development of a 20-point peace plan and security guarantees for Kyiv. However, no significant progress has been achieved so far, as Moscow continues to insist on its territorial demands.

Regarding U.S. monetary policy, markets currently expect two Fed rate cuts in 2026. Nevertheless, Federal Reserve officials remain divided over the need for additional monetary easing.

In an interview with The Wall Street Journal, Cleveland Fed President Beth Hammack stated that no further rate adjustments are necessary in the coming months given persistent inflationary pressures, and that current interest rates are likely to remain in place until spring.

From a technical perspective, gold continues to set new all-time highs. However, it is worth noting that the Relative Strength Index (RSI) is in overbought territory, although its line is pointing upward, indicating strong bullish momentum. At the same time, the overbought condition suggests that a period of consolidation is likely in the near future. In the event of a correction, the pair is expected to find support near $4,380, the former all-time high.

The material has been provided by InstaForex Company - www.instaforex.com