Gold edged above the psychologically important $5,000 per ounce level on Friday, extending a two-day recovery as traders balanced escalating geopolitical tensions with a cautious Federal Reserve outlook.
Geopolitical Developments Support Bullion
Tensions between the United States and Iran intensified after President Donald Trump reportedly set a 10–15 day deadline for nuclear deal negotiations. The U.S. also deployed its largest military presence in the Middle East since the 2003 Iraq invasion.
Such geopolitical uncertainty tends to increase safe-haven demand for gold, helping prices stabilize above the key $5,000 mark.
Fed Signals Limit Upside Momentum
Despite geopolitical support, gains remain capped by firm U.S. economic data and cautious Federal Reserve commentary.
Federal Reserve Governor Stephen Miran tempered expectations for rate cuts this year, citing stronger-than-expected economic performance.
Key macro highlights:
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Initial jobless claims declined to 206K, reinforcing labor market resilience.
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January minutes from the Federal Open Market Committee showed policymakers divided, with some officials even signaling possible rate hikes if inflation remains elevated.
Markets are now focused on the upcoming PCE inflation data, the Fed’s preferred gauge, which could significantly influence rate expectations and near-term gold direction.
Physical Demand & Weekly Outlook
Physical demand across Asia remains seasonally subdued amid Lunar New Year holidays, limiting additional upside support from spot buying.
Although gold has recovered modestly over the past two sessions, bullion is still on track for a slight weekly loss.
Short-Term View
Gold remains caught between:
Sustained trade above $5,000 may require softer inflation data or renewed geopolitical escalation, while stronger PCE readings could trigger renewed pressure toward lower support levels.
Analysis by - Shahzad Ahmad
Frequently Asked Questions
Why did gold move back above $5,000 per ounce?
Gold gained support from escalating tensions between the United States and Iran, which increased safe-haven demand. Geopolitical uncertainty often drives investors toward bullion as a protective asset.
How is the Federal Reserve influencing gold prices?
Comments from Federal Reserve Governor Stephen Miran suggested rate cuts may not come as quickly as markets previously expected. Additionally, minutes from the Federal Open Market Committee showed policymakers remain cautious about inflation. Higher-for-longer rates typically limit upside in non-yielding assets like gold.
Why is the PCE data important for gold?
The Personal Consumption Expenditures (PCE) index is the Fed’s preferred inflation gauge.
Lower-than-expected PCE → Increases chances of rate cuts → Bullish for gold.
Higher-than-expected PCE → Supports tighter policy → Bearish for gold.
What role does the U.S. labor market play in gold’s movement?
Initial jobless claims fell to 206K, signaling continued labor market strength. A resilient jobs market reduces urgency for rate cuts, which can pressure gold prices.
What is the short-term outlook for gold?
Gold is currently balancing:
Geopolitical support (bullish factor)
Hawkish Fed tone & strong data (bearish factor)
Sustained movement above $5,000 may require softer inflation data or further geopolitical escalation, while strong economic data could trigger consolidation or downside testing
