Geopolitical Risks Support Gold Rally, but Fed Policy Expectations Limit Near-Term Upside

Summary:

Rising tensions in the Middle East and increased risks to energy supplies have driven safe-haven inflows into gold, allowing prices to extend their recent rebound. However, cooling U.S. labor market conditions and expectations that the Federal Reserve will maintain a restrictive policy stance continue to limit short-term upside potential. From a technical perspective, gold’s near-term trend has improved, and holding above the $4,050 support level could open the way toward the $4,200 region. Over the medium to long term, expectations of monetary easing, central bank gold purchases, and persistent geopolitical risks are expected to continue supporting gold prices, with the potential for gold to reach $4,700 by the end of 2026.

BUY XAUUSD

EXP

TRADING

4061.31

Entry Price

4398.00

3950.00

4045.00 -4.52 -0.11%

0.0

Pips

Flat

3950.00

Exit Price

4061.31

Entry Price

4398.00

Fundamental

Gold prices have continued to rebound since the beginning of this week, supported by rising geopolitical risks. Ongoing tensions in the Middle East, stronger warnings from President Donald Trump regarding Iran, and increasing risks to energy transportation in the Red Sea and Black Sea regions have significantly boosted safe-haven demand. Meanwhile, rising oil prices have further intensified global inflation concerns, enhancing gold’s appeal as an inflation hedge.

However, cooling conditions in the U.S. labor market have limited gold’s further upside. The latest ADP employment report showed that U.S. job growth slowed for the fourth consecutive month, indicating a gradual loss of economic momentum. At the same time, markets expect the Federal Reserve to keep interest rates unchanged at the July FOMC meeting, while expectations for a September rate cut remain highly uncertain. As a result, movements in the U.S. dollar could continue to weigh on gold prices.

Overall, gold remains supported by safe-haven demand in the short term but continues to face pressure from the Fed’s policy outlook and fluctuations in the U.S. dollar. Market confidence is gradually recovering, and gold is expected to maintain a moderately bullish consolidation pattern toward the end of the year, with potential to challenge higher levels.

Over the longer term, continued central bank gold purchases, geopolitical risk premiums, and expectations of lower real interest rates are likely to provide structural support for gold prices. Gold is expected to potentially reach the $4,700 level by the end of 2026.

Geopolitical Risks Support Gold Rally, but Fed Policy Expectations Limit Near-Term Upside_1

Technical Analysis

From a technical perspective, gold’s short-term structure has improved, although upside resistance remains.

Gold prices have regained key moving average levels, while the four-hour chart has gradually shifted toward a bullish structure. The $4,050 area has provided effective support and represents a key defense level for short-term bulls. As long as prices remain above this region, the current rebound structure is expected to remain intact.

Overall, gold remains in a short-term recovery phase. Traders should closely monitor whether the $4,050 support level holds. If prices remain above this level, the market could continue advancing toward the $4,150-$4,200 region. However, a break below $4,050 would increase the risk of a failed rebound and a return to consolidation. A further decline below $4,000 could expose gold to a retest of the $3,900-$3,950 support zone.

From a medium- to long-term perspective, the broader bullish trend remains supported by global central bank demand, geopolitical uncertainty, and expectations of declining real interest rates. The long-term target remains around $4,700 by the end of 2026.

Trading Strategy

Direction: Buy

Entry Price: 4050

Target Price: 4398

Stop Loss: 3950

Valid Until: August 22, 2026 23:55

Support Levels: 4052, 4016, 3984

Resistance Levels: 4104, 4166, 4180

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