Gold markets have been anything but dull in 2025, but what’s more interesting is that the metal is back in the headlines and climbing higher once again. In recent weeks, gold briefly pushed above the US$3,400 per ounce mark before retreating, as a confluence of geopolitical tensions, global economic uncertainties, and technical signals lured investors back to the traditional safe haven asset. However, it failed to sustain its ascent on two separate occasions.
This raises an important question: what’s driving volatility in gold? Is geopolitics the main catalyst? Undoubtedly, yes. Renewed hostilities in the Middle East, particularly between Israel and Iran, have reignited fears of broader regional escalation.
Investors, wary of conflict spillovers, have sought the stability of gold ETFs, leading to increased inflows. According to recent data from Investing.com, geopolitical risk premium is once again being priced into gold, with a clear correlation between news-driven spikes in tensions and short-term rallies in bullion.
However, it’s not only geopolitics at play. Macroeconomic fundamentals are also a significant driver. While gold’s geopolitical sensitivity is well-known, macroeconomic undercurrents continue to steer sentiment. Concerns about the US administration’s fascination with deregulation and universal tariffs have stirred fresh interest in gold as a hedge. Historically, gold has shown an inverse relationship with the US dollar, and recent price action has reaffirmed this. When the dollar retreats, gold tends to gain strength.
Could the Federal Reserve’s next move change the game? This is where investors must tread carefully. The Fed’s stance on interest rates remains a crucial determinant for gold prices going forward. Bullion markets have largely priced in the prospect of easing US interest rates, which have been supporting bullish momentum and projections in gold prices. However, amid current uncertainties, a hawkish Fed, reaffirming its reluctance to begin a rate-cut cycle, could limit gold’s gains.
Conversely, any signs of economic weakness prompting rate cuts would enhance gold’s appeal. Market participants are already pricing in a possible dovish tilt later in the year, especially if labour market data softens or consumer demand falters. Should that materialise, gold could decisively breach the current support zone at around US$3,200 an ounce.
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How do the charts look? Are technicals confirming the bullish narrative? Technically, gold remains in a long-term uptrend, although some caution is warranted in the short term. There are chances of a triangle formation on the daily chart, implying potential for consolidation or short-term pullbacks with current strong resistance between US$3,360 and US$3,380 (represented by the blue downward sloping line). On the flip side, US$3,170 acts as a critical support level. Unless there is a clear break below this zone, the uptrend remains intact.
What role does US President Donald Trump play in all this? Surprisingly, a bigger one than many anticipate. Trump’s headlines – particularly around trade tariff negotiations – have added a speculative edge into markets. Investors braced the Trump era as one of unpredictability, but contrary to the original belief of a potential economic slowdown, we are witnessing a softer turnaround in trade negotiations.
For now, investors have a basket full of key themes: firstly, the evolution of US monetary policy and inflation data; secondly, geopolitical flare-ups – not just in the Middle East but also those triggered by trade tariffs; thirdly, ETF inflows which provide a real-time view of investor sentiment as well as anxiety. Finally, it is essential that investors keep one eye on the charts and the other on the headlines, as both technical and macroeconomic cues will be instrumental in shaping gold’s outlook in the months ahead.
The writer is senior market analyst at Phillip Nova
