The resilience of gold above $4,800 per ounce at this stage reflects a delicate and complex balance between traditional supporting factors and emerging pressures—one that cannot be superficially interpreted or reduced to the movement of the dollar alone.
It is true that the U.S. dollar’s retreat from its recent peaks, after failing to sustain its recovery momentum from a four-year low, provided gold with a short-term breather and attracted some buyers.
Yet, I see this support as still fragile, as it is not based on a fundamental shift in monetary policy or the global risk landscape, but rather on a temporary pause in the dollar’s strength rather than sustained weakness.
From a macroeconomic perspective, what currently supports gold is not a surge in risks, but the absence of clear catalysts for a strong dollar comeback.
Markets have become highly sensitive to any signals from the Federal Reserve, and in this context, I view Kevin Warsh’s nomination for the Fed chair as a negative balancing factor for gold over the medium term. Warsh’s well-known hawkish stance on inflation sends a clear message that U.S. monetary policy may not ease easily, even if some indicators show temporary slowdowns. In my view, this scenario is enough to restrain any sharp upward move in gold unless a genuine economic or financial shock occurs.
At the same time, gold has staged a strong recovery from $4,400, its lowest level since early January, indicating genuine investor demand at dips rather than purely short-term speculation. However, I interpret this behaviour as investors repositioning after the steep correction from the all-time high near $5,600, rather than the beginning of a fully-fledged new bullish wave. In my view, the market remains in a “bottom-testing” phase, with investors seeking confirmation that the corrective decline has truly ended.
Geopolitical factors, which have historically fuelled gold’s rally, are currently experiencing relative calm, both in terms of the Iranian issue and trade tensions, particularly after the U.S.-India trade agreement announcement. In my opinion, these developments reduce the risk premium that had been priced into gold in recent weeks. Although this calm may be temporary, it is limiting gold’s ability to achieve strong additional gains in the near term, especially without a sudden escalation or a collapse in global risk appetite.
Additionally, the Chicago Mercantile Exchange’s decision to raise margin requirements for precious metals futures represents a technical pressure that should not be underestimated. Historically, such measures trigger forced liquidations and a reduction in open positions—a pattern we observed in the past two days as gold fell to a four-week low. I expect this factor to remain relevant in the short term, potentially preventing free upward movement until the market fully absorbs these new requirements.
Regarding U.S. economic data, the improvement in the manufacturing PMI to 52.6 points, marking the first expansion in factory activity in a year, reflects relative economic resilience, which is not favourable for gold over the medium term. I anticipate that the continued release of positive data, particularly in the labour market as may be reflected in JOLTS and ADP figures, will strengthen the dollar and reinforce the Fed’s confidence in avoiding a rapid rate cut, a scenario that naturally puts downward pressure on gold prices.
Based on all the above, my outlook for gold leans toward a neutral-to-slightly-bearish corrective range rather than a new impulsive rally. I believe the $4,800 level will remain a pivotal zone, with buyers defending it as long as the dollar lacks strong momentum, but any clear break below this level could open the door to retesting lower levels. Conversely, a sustainable return to record highs requires one of two conditions: either a sharp and unexpected escalation in geopolitical risks or a clear shift in the Fed’s stance toward easing—neither of which is currently present.
In conclusion, gold is going through a “re-pricing” phase after an overextended rally, and the market is now more rational and detail-sensitive. Investment in gold at this stage should be selective and cautious, focusing on risk management rather than betting on uninterrupted gains. Gold has not lost its shine as a safe haven, but it also lacks the justification to launch a new historic rally.
