With the Middle East crisis and a weakening dollar, gold bulls are aiming for $5300, signaling the start of a new bull market.
2026-02-25 14:08:50
On Wednesday (February 25), spot gold prices fluctuated upwards during the Asian and European sessions, rising as much as 1.3% to around $5210. Ahead of the third round of US-Iran nuclear talks on Thursday, the US continued to increase its military presence in the Middle East, fueling geopolitical risks. This was a key factor reigniting safe-haven flows into the gold market. In addition, Trump's State of the Union address triggered some selling of the US dollar, providing further support for gold prices.
Despite the Federal Reserve maintaining a hawkish stance and positive economic data on Tuesday, investors remained cautious due to renewed uncertainty surrounding President Trump's trade policies. In fact, the minutes of the January FOMC meeting revealed that several Fed officials believed further monetary easing might not be advisable until there were signs that the decline in inflation was back on track. Furthermore, recent comments from several influential policymakers also suggest that the Fed is in no hurry to cut interest rates in the coming months, given that inflation remains stubbornly persistent.
Boston Federal Reserve President Susan Collins said on Tuesday that keeping interest rates at their current range "for some time" is appropriate. Meanwhile, Richmond Federal Reserve President Thomas Barkin noted that monetary policy is "well positioned" to address the various risks to the economic outlook.
On the economic data front, the Conference Board's consumer confidence index rose to 91.2 from 89.0 in January (revised upward from 84.5). However, dollar bulls struggled to attract any follow-through buying as investors remained concerned about the continued uncertainty surrounding Trump's global tariff policies.
Trump's State of the Union address on Wednesday came against a complex backdrop: the Supreme Court's crackdown on tariff policies, a funding cut to the Department of Homeland Security, approximately 60% of the public's dissatisfaction with his performance (polls show mostly negative views on inflation, tariffs, immigration, and economic handling), and only nine months until the midterm elections. Some Democratic lawmakers boycotted the speech and instead participated in counter-activities. The foundation of confidence in the US dollar was shaken; during Wednesday's Asian trading session, the dollar index fluctuated lower, currently trading around 97.65, a daily decline of approximately 0.25%.
On Tuesday, the United States officially imposed a 10% tariff on all goods except those exempted, a move stemming from Trump's initial announcement last Friday following the Supreme Court's ruling on his broad tariff policy. In his State of the Union address, Trump stated the White House was working to raise tariffs to 15%, exacerbating market concerns about retaliatory measures and the potential economic impact of disruptions to global supply chains. This, in turn, put pressure on the dollar, providing additional support for gold prices.
The market will now focus on US macroeconomic data, which, along with speeches from influential Federal Open Market Committee members, could provide some impetus for gold prices.
Gold price momentum has cooled somewhat from overbought territory, but the Relative Strength Index (RSI) (14) remains stable above the midline, suggesting that upward pressure persists rather than indicating a deeper pullback. The Moving Average Convergence Divergence (MACD) has retreated from recent highs and is flattening, with the negative histogram contracting, indicating that the market is in a consolidation phase within an overall bullish structure, rather than having completed a top formation.
On the upside, initial resistance lies near the recent rebound high of $5249.29. A break above this level would open the way to the next bullish target of the 76.4% Fibonacci retracement level ($5311.26). As long as gold prices hold above the initial support of $5100, any pullbacks are likely to be seen as corrections within the current uptrend.
On the downside, initial support appears around $5,100. A break below $5,100 would expose deeper support around $5,050, where buyers are expected to defend the overall bullish tone. A break below this support level could reverse the bullish trend and push gold prices to test the 200-period moving average (MA, 4918.62).
(Spot gold 4-hour chart, source: FX678)
At 14:08 Beijing time, spot gold was trading at $5186.84 per ounce.
The Fed's hawkish rhetoric failed to quell market anxieties; Trump's speech became the focus.
Despite the Federal Reserve maintaining a hawkish stance and positive economic data on Tuesday, investors remained cautious due to renewed uncertainty surrounding President Trump's trade policies. In fact, the minutes of the January FOMC meeting revealed that several Fed officials believed further monetary easing might not be advisable until there were signs that the decline in inflation was back on track. Furthermore, recent comments from several influential policymakers also suggest that the Fed is in no hurry to cut interest rates in the coming months, given that inflation remains stubbornly persistent.
Boston Federal Reserve President Susan Collins said on Tuesday that keeping interest rates at their current range "for some time" is appropriate. Meanwhile, Richmond Federal Reserve President Thomas Barkin noted that monetary policy is "well positioned" to address the various risks to the economic outlook.
On the economic data front, the Conference Board's consumer confidence index rose to 91.2 from 89.0 in January (revised upward from 84.5). However, dollar bulls struggled to attract any follow-through buying as investors remained concerned about the continued uncertainty surrounding Trump's global tariff policies.
Trump's State of the Union address on Wednesday came against a complex backdrop: the Supreme Court's crackdown on tariff policies, a funding cut to the Department of Homeland Security, approximately 60% of the public's dissatisfaction with his performance (polls show mostly negative views on inflation, tariffs, immigration, and economic handling), and only nine months until the midterm elections. Some Democratic lawmakers boycotted the speech and instead participated in counter-activities. The foundation of confidence in the US dollar was shaken; during Wednesday's Asian trading session, the dollar index fluctuated lower, currently trading around 97.65, a daily decline of approximately 0.25%.
On Tuesday, the United States officially imposed a 10% tariff on all goods except those exempted, a move stemming from Trump's initial announcement last Friday following the Supreme Court's ruling on his broad tariff policy. In his State of the Union address, Trump stated the White House was working to raise tariffs to 15%, exacerbating market concerns about retaliatory measures and the potential economic impact of disruptions to global supply chains. This, in turn, put pressure on the dollar, providing additional support for gold prices.
The market will now focus on US macroeconomic data, which, along with speeches from influential Federal Open Market Committee members, could provide some impetus for gold prices.
Gold appears poised for further gains, as the momentum to break through the key resistance level of $5,100 continues.
Gold price momentum has cooled somewhat from overbought territory, but the Relative Strength Index (RSI) (14) remains stable above the midline, suggesting that upward pressure persists rather than indicating a deeper pullback. The Moving Average Convergence Divergence (MACD) has retreated from recent highs and is flattening, with the negative histogram contracting, indicating that the market is in a consolidation phase within an overall bullish structure, rather than having completed a top formation.
On the upside, initial resistance lies near the recent rebound high of $5249.29. A break above this level would open the way to the next bullish target of the 76.4% Fibonacci retracement level ($5311.26). As long as gold prices hold above the initial support of $5100, any pullbacks are likely to be seen as corrections within the current uptrend.
On the downside, initial support appears around $5,100. A break below $5,100 would expose deeper support around $5,050, where buyers are expected to defend the overall bullish tone. A break below this support level could reverse the bullish trend and push gold prices to test the 200-period moving average (MA, 4918.62).
(Spot gold 4-hour chart, source: FX678)
At 14:08 Beijing time, spot gold was trading at $5186.84 per ounce.
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