Gold prices surge to fresh record highs during early European trading on Tuesday, with XAU/USD extending its strong upward momentum. The precious metal is up around 10% over the past month and nearly 70% in 2025, driven by intensifying geopolitical tensions and persistent economic uncertainty that continue to fuel demand for safe-haven assets.
Fed rate cut bets underpin gold rally
Expectations of further US Federal Reserve rate cuts next year remain a key pillar of support for Gold. Lower interest rates tend to reduce the opportunity cost of holding non-yielding assets, enhancing Gold’s appeal. Markets are currently pricing in multiple Fed rate cuts in 2026 amid signs of easing inflationary pressures and a cooling US labor market.
Focus on US macro data
Investors are now turning their attention to the preliminary US Gross Domestic Product (GDP) reading for the third quarter, due later on Tuesday. The US economy is expected to have expanded at an annualized pace of 3.2% in Q3, slowing from 3.8% growth in Q2.
A stronger-than-expected GDP print could provide short-term support to the US Dollar and weigh on USD-denominated Gold prices. In addition, US Durable Goods Orders, Industrial Production, and ADP employment data are also scheduled for release, adding to near-term volatility.
Geopolitical tensions drive safe-haven demand
Geopolitical developments remain a powerful tailwind for Gold. US President Donald Trump said the United States may keep or sell oil seized off the coast of Venezuela in recent weeks and confirmed that the seized ships would also be retained.
Meanwhile, Russia has intensified strikes on Ukraine’s southern Odesa region, causing widespread power outages and threatening key maritime infrastructure. These developments have reinforced global risk aversion and boosted demand for safe-haven assets.
Fed leadership uncertainty adds to market caution
Uncertainty surrounding the future leadership of the Federal Reserve has also contributed to Gold’s appeal. Fed Governor Stephen Miran said he is likely to remain on the Board of Governors beyond the end of his term until a successor nominated by President Trump is confirmed by the Senate.
Trump is expected to nominate a new Fed chair ahead of Jerome Powell’s term ending in May. According to the CME FedWatch tool, markets currently price only a 20% probability of a rate cut at the Fed’s January meeting, following three consecutive quarter-point reductions.
Gold technical outlook remains bullish but stretched
From a technical perspective, Gold maintains a strong bullish structure, with prices holding well above the 100-day Exponential Moving Average. Expanding Bollinger Bands point to strengthening upside momentum. However, the 14-day Relative Strength Index is above 70, signaling overbought conditions and suggesting that some near-term consolidation may occur before the next leg higher.
Key levels to watch
A sustained breakout could open the door toward the $4,400 psychological level, with further upside targeting $4,450. On the downside, initial support is seen near the December 22 low at $4,338, followed by the $4,300 round level, which also aligns with the December 17 low.
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