Geopolitical shocks and US data fuel a fierce battle for gold to reach $5,000.
2026-02-20 16:29:23
On Friday (February 20), during the Asian and European sessions, spot gold maintained a slight upward trend and fluctuated above 5,000 points. The bulls were hesitant and did not rush to make a price breakthrough. It is currently trading at $5,011 per ounce, up 0.28%.
The ongoing escalation of geopolitical tensions in the Middle East, the crucial countdown to the US-Iran Geneva talks, coupled with the uncertainty surrounding the Federal Reserve's policy path, have led to a market trend driven by both risk aversion and interest rate logic.
The US-Iran Geneva talks only reached a principled consensus on the nuclear framework. On February 19, the US set a maximum negotiation period of 10-15 days, with March 1-6 as the key time node, making it clear that it would withdraw from the negotiations if its core demands were not met, and even hinted at the option of military strikes. Iran insisted that its right to peaceful uranium enrichment was inviolable, and sent a letter to the United Nations warning of the risk of military aggression.
The situation has been further complicated by multiple variables: the EU has officially added Iran's Islamic Revolutionary Guard Corps to its list of terrorist organizations, Israel has made strong moves to disrupt the negotiations, and Prime Minister Netanyahu has stated that he is fully prepared to respond and threatened that Iran would face an "unimaginable" retaliation if it retaliates, which has become the biggest uncertainty in the negotiations.
Meanwhile, Iran and Russia completed joint military exercises in the Oman Sea and the northern Indian Ocean, strengthening maritime security cooperation and further complicating the regional power struggle.
The minutes of the Fed’s January meeting sent a clear signal: officials were extremely cautious about cutting interest rates, and there was a divergence between the risks of stagnant inflation and a softening labor market, confirming expectations that interest rates will remain high and that a rate cut will occur in the second half of 2026.
Policy disagreements are brewing: the Federal Reserve’s cautious stance clashes with Trump’s preference for low financing costs, which may exacerbate the difficulties for new chairman nominee Warsh in governing. Meanwhile, low interest rate expectations directly benefit non-interest-bearing gold, and coupled with concerns about the Fed’s independence, this continues to enhance the safe-haven value of gold.
More clues are needed to overturn the entrenched inflation. The recently released PCE and CPI data are insufficient to change the Fed's overall assessment. This means that even if the PCE is lower than expected tonight, coupled with last month's lower-than-expected CPI, gold will not see a significant rise. On the contrary, if the PCE is higher than expected, it may severely damage gold.
Leading institutions such as BNP Paribas, Deutsche Bank, and Goldman Sachs are bullish on gold, believing that the core logic supporting this multi-year bull market remains intact: the ongoing geopolitical conflicts in the Middle East, the uncertainty of Federal Reserve policies, and inflation concerns will continue to provide safe-haven support for gold prices.
Currently, there is a slight divergence between US data and the Federal Reserve's position. If subsequent PCE data points to inflation, it could easily align with the Fed's assessment, lowering expectations for interest rate cuts and suppressing gold prices. Meanwhile, with geopolitical tensions on the verge of erupting and negotiations entering their final countdown, any unexpected changes could trigger sharp fluctuations in gold prices. The interplay between safe-haven demand and a strong dollar will dominate short-term market movements.
From a technical perspective, after spot gold recovered above 4944, the bulls regained control, and gold prices are expected to continue rising.
(Spot gold daily chart, source: FX678)
At 16:27 Beijing time, spot gold was trading at $5,018 per ounce.
The ongoing escalation of geopolitical tensions in the Middle East, the crucial countdown to the US-Iran Geneva talks, coupled with the uncertainty surrounding the Federal Reserve's policy path, have led to a market trend driven by both risk aversion and interest rate logic.
At the heart of the geopolitical storm: Countdown to US-Iran negotiations begins, with Israel becoming the biggest variable.
The US-Iran Geneva talks only reached a principled consensus on the nuclear framework. On February 19, the US set a maximum negotiation period of 10-15 days, with March 1-6 as the key time node, making it clear that it would withdraw from the negotiations if its core demands were not met, and even hinted at the option of military strikes. Iran insisted that its right to peaceful uranium enrichment was inviolable, and sent a letter to the United Nations warning of the risk of military aggression.
The situation has been further complicated by multiple variables: the EU has officially added Iran's Islamic Revolutionary Guard Corps to its list of terrorist organizations, Israel has made strong moves to disrupt the negotiations, and Prime Minister Netanyahu has stated that he is fully prepared to respond and threatened that Iran would face an "unimaginable" retaliation if it retaliates, which has become the biggest uncertainty in the negotiations.
Meanwhile, Iran and Russia completed joint military exercises in the Oman Sea and the northern Indian Ocean, strengthening maritime security cooperation and further complicating the regional power struggle.
Policy game: Fed's cautious rate cuts and political divisions are favorable for gold.
The minutes of the Fed’s January meeting sent a clear signal: officials were extremely cautious about cutting interest rates, and there was a divergence between the risks of stagnant inflation and a softening labor market, confirming expectations that interest rates will remain high and that a rate cut will occur in the second half of 2026.
Policy disagreements are brewing: the Federal Reserve’s cautious stance clashes with Trump’s preference for low financing costs, which may exacerbate the difficulties for new chairman nominee Warsh in governing. Meanwhile, low interest rate expectations directly benefit non-interest-bearing gold, and coupled with concerns about the Fed’s independence, this continues to enhance the safe-haven value of gold.
More clues are needed to overturn the entrenched inflation. The recently released PCE and CPI data are insufficient to change the Fed's overall assessment. This means that even if the PCE is lower than expected tonight, coupled with last month's lower-than-expected CPI, gold will not see a significant rise. On the contrary, if the PCE is higher than expected, it may severely damage gold.
Institutional consensus: The bull market logic remains unchanged, and gold prices are expected to resume their upward trend.
Leading institutions such as BNP Paribas, Deutsche Bank, and Goldman Sachs are bullish on gold, believing that the core logic supporting this multi-year bull market remains intact: the ongoing geopolitical conflicts in the Middle East, the uncertainty of Federal Reserve policies, and inflation concerns will continue to provide safe-haven support for gold prices.
Summary and Technical Analysis:
Currently, there is a slight divergence between US data and the Federal Reserve's position. If subsequent PCE data points to inflation, it could easily align with the Fed's assessment, lowering expectations for interest rate cuts and suppressing gold prices. Meanwhile, with geopolitical tensions on the verge of erupting and negotiations entering their final countdown, any unexpected changes could trigger sharp fluctuations in gold prices. The interplay between safe-haven demand and a strong dollar will dominate short-term market movements.
From a technical perspective, after spot gold recovered above 4944, the bulls regained control, and gold prices are expected to continue rising.
(Spot gold daily chart, source: FX678)
At 16:27 Beijing time, spot gold was trading at $5,018 per ounce.
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