Gold Prices Hit 11-Week High – What’s Driving the Surge?

Gold prices have surged to an 11-week high, fueled by growing safe-haven demand amidst uncertainty over U.S. trade policies and a weakening U.S. dollar. Investors are flocking to gold as geopolitical and economic concerns intensify, driving its appeal as a reliable asset.

Gold Prices Reach Record Highs
As of 0236 GMT, spot gold climbed 0.1%, reaching $2,748.18 per ounce—its highest level since November 5, 2024. Similarly, U.S. gold futures advanced by 0.1% to $2,762.90, reflecting the continued bullish trend in the market.

Key Factors Fueling Gold’s Surge
1. Trade Policy Uncertainty
Gold’s rally has been strongly influenced by ongoing concerns surrounding U.S. trade policies under the Trump administration. Kelvin Wong, a senior market analyst at OANDA, highlights that ambiguity over the implementation of trade policies is weakening the U.S. dollar. Since gold prices often move inversely to the dollar, a weaker dollar makes gold more attractive to international investors.

President Trump’s hesitation in imposing immediate trade barriers has caused fluctuations in the dollar, further boosting gold prices. This dynamic underscores gold’s role as a preferred asset during times of economic instability.

2. Federal Reserve Policy and Inflation Risks
The proposed 10% tariff on Chinese imports, set to take effect on February 1, could stoke inflation concerns. This has led to speculation that the Federal Reserve might maintain elevated interest rates longer than anticipated. Higher rates typically reduce the appeal of non-yielding assets like gold, but persistent inflation fears and economic uncertainties are keeping demand for the metal high.

The Federal Reserve is set to meet on January 28-29, with expectations of steady benchmark interest rates between 4.25% and 4.50%. Despite steady economic growth and progress in controlling inflation, trade-related risks remain a key concern for policymakers and investors alike.

Technical Analysis: Gold’s Critical Levels
Gold prices are riding a strong bullish wave, with the metal trading at $2,749.54—a 0.05% increase in early trading. Key technical levels to monitor include:

Pivot Point: $2,732.92, signaling continued upward momentum.
50-Day EMA: $2,715.06, acting as dynamic support.
Resistance Level: A breakout above $2,754.99 could push prices higher.
Support Level: A drop below $2,717.24 might trigger selling pressure.
What Lies Ahead for Gold Prices?
Gold prices are expected to remain strong in the short term, bolstered by geopolitical tensions, Federal Reserve policy decisions, and a weak dollar. Traders are closely watching for updates on U.S. trade policies and their potential impact on inflation and interest rates.