Geopolitical Tensions Push Gold Beyond $4,440 Mark as Fed Rate Cut Bets Intensify

Escalating crises in Venezuela and the Middle East reignite safe-haven demand for gold, with the precious metal hitting record levels of $4,442

Gold has experienced a significant rally on Monday, breaking through the $4,440 barrier as investors seek protection amid heightened geopolitical uncertainties. The yellow metal surged over 2%, currently trading near $4,435 after starting the session at $4,338, driven by a confluence of risk-off sentiment and monetary policy expectations.

The primary catalyst stems from escalating tensions in the Western Hemisphere, where US President Donald Trump’s announced “blockade” of Venezuelan oil tankers has intensified regional instability. Combined with renewed Iran-Israel friction, markets are rotating capital into traditional safe-haven assets. This geopolitical backdrop is further amplified by expectations that the Federal Reserve will maintain its accommodative stance into 2026, with money markets pricing approximately 59 basis points of additional easing.

Currency Weakness and Fed Divergence Support Bullion’s Ascent

The US Dollar’s weakness is playing a complementary role in gold’s outperformance. The US Dollar Index (DXY) has declined 0.40% to trade at 98.32, below its opening level. This currency softness is particularly relevant for international investors—those tracking 118 CAD to USD exchange rates, for instance, may find gold denominated in alternative currencies relatively more attractive.

Meanwhile, the Federal Reserve remains internally divided on future policy direction. Fed Governor Stephen Miran reiterated his dovish positioning, supporting the case for continued rate reductions. However, Cleveland Fed President Beth Hammack injected caution into the narrative, highlighting potential irregularities in November’s CPI data attributed to the US government shutdown. She suggested that annual price pressures may have been understated, implying the neutral interest rate could be higher than consensus expectations.

Market Data Points to Extended Rally Potential

US Treasury yields have moved modestly higher, with the 10-year note yield advancing 2 basis points to 4.171%. Real yields, which typically move inversely to gold prices, have climbed to 1.91%. Yet despite these headwinds, XAU/USD continues to command buyer interest, indicating the strength of safe-haven demand.

The technical setup appears constructive. The Relative Strength Index has entered overbought territory, suggesting strong upside momentum remains intact. Resistance levels are now being established at $4,500, with secondary targets at $4,550 and $4,600 should the rally persist. Support has shifted to the $4,400 level, with former all-time highs at $4,381 and $4,350 serving as secondary floor levels.

Week Ahead: Economic Data Could Reset Market Narrative

With Christmas holidays shortening the trading week, Tuesday’s economic calendar becomes critical. ADP Employment data, Q3 GDP preliminary estimates, October Durable Goods Orders, and monthly Industrial Production figures will provide fresh signals on US economic momentum and potentially influence Fed rate-cut expectations for 2026. Until then, geopolitical developments and Treasury market dynamics are likely to remain the dominant forces driving gold positioning.