Gold was closing in on another fresh record high on Wednesday after breaking back through the $3,400 mark.
The combination of geopolitical risks and central bank buying is driving prices higher with technicals supporting further gains in the near term.
“Since bottoming out around $3,245/oz, gold has experienced an impressive rally, supported by several long-term structural factors. Chief among them are escalating geopolitical risks, expectations of a shift in monetary policy, and sustained accumulation by central banks,” explained Linh Tran, Market Analyst at XS.com.
“These three pillars are converging to create a favorable environment for gold to continue asserting its role as a safe-haven and store of value asset.”
Central banks globally are ramping up their purchases of gold and are opting to hold the yellow metal over dollars in some circumstances, providing further upside pressure on the gold price.
Global conflicts are keeping the safe haven trade alive and well. Although the safe-haven trade may not be the primary driver of gold prices currently, the ongoing tensions in the Middle East and Asia keep gold at the forefront of many traders’ minds.
“Geopolitical risks remain a key catalyst driving defensive demand in global markets,” Linh explained.
“The situation in Eastern Europe remains at an impasse, with Russia and Ukraine unable to establish a viable diplomatic roadmap toward lasting peace. The prolonged conflict not only puts pressure on Europe’s energy security but also triggers widespread instability across global supply chains—factors that historically prompt investors to increase their exposure to gold.”