- Gold forecast edges higher, aiming for $5,000 as the geopolitics, central bank buying, and de-dollarization keep the demand elevated.
- US-Europe conflict over Greenland escalates, resulting in a weaker dollar.
- US Core PCE and Q3 GDP data due this week could further set the direction for gold.
A strong combination of geopolitical tensions, de-dollarization, and steady demand from central banks and investors is driving gold to new record highs near $4,900. The immediate cause is rising tensions between the US and important NATO allies over President Trump’s desire to take control of Greenland and threats of high tariffs on some European countries. This includes a 200% tax on French wine and champagne.
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The situation has triggered a “Sell America” rotation out of US assets, pushing the Dollar Index (DXY) to recent lows. This has strengthened gold’s traditional inverse relationship with the dollar.
Fears of a broader trade and geopolitical rupture between the US and Europe, as well as the risk of military escalation around Greenland, increase gold’s safe-haven appeal. Equities in the US and Asia have sold off sharply, bond yields have spiked, and volatility has picked up, all of which are classic conditions under which gold outperforms.
At the same time, investors are thinking about what US monetary policy will look like in the future. Even though markets have lowered their expectations for very aggressive Fed easing, the policy environment remains generally favorable for non-yielding assets due to ongoing uncertainty, high levels of debt, and political pressure on the central bank.
Looking ahead, the tactical bias for gold remains skewed to the upside as long as:
- Tensions between the US and Europe over Greenland and tariffs are still high.
- The USD is still under pressure as investors stay cautious about de-dollarization.
- Central banks, especially in emerging markets, are converting more of their reserves into gold and silver.
The US PCE inflation data and the final Q3 GDP release are two important events this week. A stronger dollar rebound with surprisingly hawkish implications could initiate a pullback, especially since positioning is stretched and conditions are overbought above $4,800. But unless there is a clear easing of geopolitical tensions and a long-lasting rise in risk appetite, dips towards lower levels are likely to lead to more strategic buying, which keeps the medium-term test of the $5,000 area on the table.
Gold Technical Forecast: Potential Pullback After a Rally
The gold price has posted seven consecutive bullish candles, pushing towards the $4,900 area. Moving averages are stacked in a strong bullish format, while price action remains tilted to the upside. The broader trend remains strongly bullish, ignoring technicals and looking to test the $4,900 level ahead of $5,000 psychological mark.
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The 20-period MA at $4,700 and the RSI at 85.0 suggest the technical conditions are overbought, and a pullback could occur to the $4,760 area. After a massive daily gain of more than $100, the traders are now cautious amid fears of profit-taking.
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