Zhang Yaoxi: Escalating geopolitical risks increase uncertainty, and gold prices are expected to reach new highs again

Zhang Yaoxi: Increased geopolitical risks add uncertainty; gold prices may reach new highs again
Last week in the gold market: International gold continued its rebound from the previous week’s bottom, strengthened again, and closed positively. It also reached the extended line target as expected. Currently, bullish momentum remains stable, fundamentals are generally favorable, and technical outlook remains bullish. The market may test historical highs again in the future.
In terms of specific trends, gold prices started the week at $5,106.96 per ounce and strengthened. Although on Tuesday it recovered some gains, reaching a weekly low of $5,094.07, it then stopped falling and rebounded continuously. On Friday, bullish momentum increased further, pushing the price to a weekly high of $5,278.28. It ultimately closed steady at $5,277.15, with a weekly range of $184.21, gaining $170.19, a 3.33% increase.
Regarding influences, on Tuesday, several Federal Reserve officials warned that inflation remains high, significantly cooling expectations of rate cuts, which initially dragged the market down. However, support from buy-side traders appeared as the Fed issued dovish comments, coupled with geopolitical risks between the US and Iran becoming uncertain again on Friday. Trump expressed dissatisfaction with negotiations with Iran, and the Iran nuclear talks stalled, opening the door for possible US military action against Iran. This boosted safe-haven demand and helped gold prices strengthen again.

Outlook for this week (Monday, March 2): International gold opened sharply higher by $94.5 to $5,371.65 per ounce, driven by increased risk aversion amid escalating Middle East tensions over the weekend. Although some profit-taking occurred afterward, prices remained above last week’s closing level. The expectation is for continued upward movement during the day.
However, the US dollar index also opened strong, likely to continue rebounding in the short term, which will limit the pace of gold price increases. Additionally, the gap at the opening is large, requiring a pullback to fill. Therefore, caution is needed regarding potential retracement risks. Overall, the trend remains bullish. On one hand, the dollar index is rebounding short-term but faces downward pressure from the weekly and monthly charts, and rate cut expectations still exist for the year. On the other hand, Trump indicated that military actions against Iran could last four weeks, making short-term safe-haven sentiment difficult to ease. Thus, the main strategy this month remains bullish.
Today, focus will be on US February S&P Global Manufacturing PMI final, US February ISM Manufacturing PMI, and other data, which are expected to favor higher gold prices.
Additionally, this week will see the release of February non-farm payrolls, January retail sales, and latest US manufacturing and services indicators. The overall expectation is for these to support higher gold prices, with geopolitical risks adding to the bullish outlook during the week.

Conversely, if negotiations are optimistic, only a certain retracement may occur, but the overall trend remains upward.
Furthermore, if non-farm payroll data meet or fall below expectations, it will increase prospects for rate cuts, further supporting gold prices. Conversely, if data surpass expectations, it won’t change the rate cut cycle within the year. In the short term, retracements caused by negative factors that reach support levels are seen as buying opportunities.
Fundamentally, geopolitical tensions over the past decades are long-term uncertainties, and temporary easing is unlikely to change the overall trend. Instead, these are stepping stones that push gold prices higher.
Market expectations also include two rate cuts by the Fed this year. The US Trade Representative has indicated tariffs on some countries will be raised from 10% to 15% or higher. The re-pricing of inflation and growth expectations due to tariffs is far from over.
In terms of demand, PDR Gold ETF holdings as of February 25 show the world’s largest gold ETF, SPDR Gold Trust, increased holdings to 1,097.62 tons, up 3.43 tons from the previous trading day, reaching a new high since February 2021. This accumulation signals strong institutional confidence in gold’s long-term value.

Overall, amid a rate-cutting cycle combined with concerns over tariffs and geopolitical risks, gold remains in a bullish trend. The current sideways movement appears to be consolidating strength, waiting for the next trigger. Gold still has the potential to break above $6,000.
Technically, on the monthly chart, after gold prices continued to fall in February following January’s bearish reversal, they found support after breaking through the upward trend resistance at the start of the year, then rebounded and maintained within a new bull market space. It also remains above the 5-month moving average, indicating that the bearish correction in January has exhausted, and the new bullish outlook remains valid. The market is expected to strengthen and reach new highs again.
On the weekly chart, gold continued to strengthen last week, staying above the 5- and 10-week moving averages. Bollinger Bands are expanding upward, and technical indicators remain bullish. As long as gold stays above $5,300, it may test previous highs or reach new records.
On the daily chart, bullish momentum increased last Friday, keeping gold above the 5- and 10-day short-term moving averages. Technical indicators are in early bullish development, and Bollinger Bands are trending upward. The short-term outlook remains strong. The market opened this week with a gap higher, continuing this trend. Although a pullback for consolidation is possible, it also presents a buying opportunity. Currently, there are no significant negative pressures, so intraday trading can focus on long positions.

Gold: Support levels around $5,305 or $5,250; resistance levels near $5,415 or $5,455.
Silver: Support levels around $93.75 or $92.50; resistance levels near $98.50 or $100.
Note:
Gold TD = (International gold price × exchange rate) / 31.1035
A $1 fluctuation in international gold price roughly causes a $0.25 change in Gold TD (theoretical).
US gold futures price = London spot price × (1 + gold swap rate × days to expiry / 365)
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The above opinions and analyses are solely the author’s personal views, for reference only, not trading advice. Trade at your own risk.
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