XAU/USD Jumps to Record High on US Legal Battle, Geopolitical Jitters

Warren Takunda

Traders' Opinions

Summary:

Gold prices have shattered records, surging past $5,230 per ounce as investors flee to safety.

BUY XAUUSD

EXP

TRADING

5169.99

Entry Price

5550.00

4880.00

5142.81 -85.17 -1.63%

0.0

Pips

Flat

4880.00

Exit Price

5169.99

Entry Price

5550.00

In a stunning display of safe-haven demand, the Gold price (XAU/USD) has detonated through the $5,230 barrier during Tuesday’s early Asian trading hours, marking one of the most aggressive rallies in recent memory. The precious metal is being propelled by a toxic cocktail of escalating geopolitical brinkmanship and a sudden, chaotic lurch back toward protectionism in US trade policy, sending shockwaves through global markets.

The immediate catalyst for the surge appears to be a bewildering 24 hours in Washington. In a landmark ruling that has thrown global supply chains into disarray, the US Supreme Court deemed former President Donald Trump’s initial sweeping tariff structure illegal. However, in a move that defied the judicial check on his power, Trump took to Truth Social over the weekend to announce a new, immediate 15% tariff on a fresh slate of goods, stating the levies would be "effective immediately" and ominously warning that "additional tariffs will follow."

This legal and political whipsaw has effectively erased any semblance of predictability in US trade policy. For currency and commodity traders, this level of uncertainty is toxic. The renewed threat of a trade war is systematically eroding confidence in risk assets, driving institutional capital out of equities and into the perceived stability of the yellow metal. When the rules of global commerce are rewritten in real-time on social media, Gold’s role as the ultimate store of value becomes non-negotiable.

Compounding the economic anxiety is a high-stakes diplomatic chess game unfolding in Europe. The US and Iran are scheduled to meet in Geneva on Thursday for what diplomats describe as a "pivotal" round of talks. Sources suggest the Trump administration is cautiously optimistic that Tehran is finally presenting "serious proposals" regarding the dilution of its highly enriched uranium stockpile.

Iranian Foreign Minister Abbas Araghchi attempted to calm the waters overnight, stating that he believes there remains a "good chance of finding a diplomatic solution." However, the market is trading the risk, not the reality. Any perceived failure in Geneva, or any aggressive posturing from either side, would be an immediate accelerant for Gold prices. Conversely, a genuine breakthrough—which the market is currently pricing as a low probability—would likely trigger a sharp, if temporary, pullback in XAU/USD as risk appetite returns.

While geopolitics drives the narrative, the Federal Reserve still holds the pen. The next major test for the bull run will come Friday with the release of the US Producer Price Index (PPI) for January.

Consensus is building for a 0.3% increase in both the headline and core readings. However, given the sticky inflation narrative that has plagued the markets, the risk is skewed to the upside. A hotter-than-expected PPI report would reinforce the "higher-for-longer" interest rate narrative, potentially lifting the US Dollar and Treasury yields. Such a move would typically apply downside pressure on the non-yielding asset, testing the resolve of the current bulls.

For now, the momentum is undeniable. The market is prioritizing the preservation of capital over the cost of capital. Unless the Geneva talks produce a miracle or Friday’s data shocks the system so profoundly that it forces a repricing of the dollar, the path of least resistance for Gold remains firmly to the upside. Traders should brace for volatility, but the structural bid under Gold looks stronger than it has in years.

Technical Analysis

From a technical perspective, gold remains entrenched in a broader bullish structure on the daily chart, despite recent volatility and sharp corrective swings. The overall sequence of higher highs and higher lows remains intact following the strong impulsive rally from the 4,300–4,400 region toward the 5,500 area. While the market experienced a deep pullback after printing highs near 5,600, price has since stabilized and resumed its upward recovery, reinforcing the underlying bullish bias.

Currently trading near 5,170, gold is consolidating just below a key resistance zone around 5,250–5,300. This area has acted as a supply ceiling multiple times and represents a critical barrier for bullish continuation. The recent rally from the 4,900 support zone demonstrates strong demand on dips, with buyers consistently defending the 4,850–4,900 region. That level now serves as a major structural floor. A decisive daily close below 4,900 would mark a meaningful deterioration in market structure and could trigger a deeper corrective move toward 4,700. A sustained break beneath 4,700 would expose the 4,600 handle, signaling a broader trend correction rather than a routine pullback within an uptrend.

In the near term, price is compressing beneath 5,300 resistance after a steady sequence of bullish candles. This suggests building pressure for a potential breakout attempt. A clean and sustained break above 5,300 would likely reinvigorate upside momentum and open the path toward a retest of the 5,500–5,600 highs. A move through 5,600 would confirm continuation of the primary uptrend and shift focus toward the 5,800 psychological region.

Momentum conditions point to consolidation rather than exhaustion. The recent pullback from the highs has cooled bullish momentum without invalidating the broader structure. Price is holding above mid-range support levels, indicating that selling pressure remains corrective rather than impulsive. This supports the case for continued sideways-to-higher price action as long as 4,900 remains intact.

Overall, gold maintains a constructive technical posture on the daily timeframe. The broader trend remains bullish while price holds above 4,900, and the market appears to be preparing for another test of the 5,300 resistance barrier.

TRADE RECOMMENDATION

BUY GOLD

ENTRY PRICE: 5,170

STOP LOSS: 4,880

TAKE PROFIT: 5,550

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