Gold prices are currently trading just below the $4,600 level after reaching an all-time high earlier in the session. The precious metal’s recent gains reflect a surge in safe-haven demand driven by elevated geopolitical tensions, with key flashpoints in Venezuela, Ukraine and Iran, compounded by aggressive US rhetoric regarding Greenland. Together, these factors have increased uncertainty and reinforced demand for gold, widely regarded as the ultimate safe-haven asset. However, today’s gains reflect more than geopolitical risk alone. They follow comments by Federal Reserve Chair Jerome Powell confirming that the US Department of Justice had threatened him with criminal indictment in connection with the renovation of the central bank’s headquarters. Many investors view this development as a serious challenge to the Federal Reserve’s independence and a further escalation of the US administration’s efforts to push for lower interest rates. Any perceived erosion of central bank independence could reduce the appeal of US assets to global investors, creating an environment of heightened uncertainty and potentially accelerating flows into refuge assets such as gold. Against this backdrop, there is scope for further upside in gold prices.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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