Gold Holds Strong as Geopolitical Tensions Stir Safe-Haven Demand
Saturday, July 19th 2025
A cautious calm dominated gold markets early in the week, with prices largely range-bound despite soft inflation data from the U.S. However, tensions in the Middle East erupted midweek, sending shockwaves through financial markets and driving investors back into safe-haven assets like gold.
From Sideways to Skyward: A Volatile Week for Gold
Gold opened the week trading around $3,317 per ounce, dipping briefly below $3,300 on Sunday night. For the first few days, prices hovered between $3,320 and $3,345, showing little intention of breaking out. But by Wednesday afternoon, rising whispers of regional conflict sent the yellow metal climbing fast.
A surge began at $3,324, peaking at $3,377 later that night, followed by a dip and another rally that flirted with the $3,400 mark during Thursday’s North American open. The tipping point came after reports surfaced of Israeli strikes on Iran, propelling spot gold above $3,440 before a retreat to $3,414. The market then settled into a band between $3,420 and $3,435 to close the week.
At the time of writing, spot gold stood at $3,432.83, gaining 1.37% on the day and 3.47% for the week.
Wall Street vs. Main Street: Divided Outlooks Ahead of Central Bank Decisions
Kitco’s Weekly Gold Survey revealed a bullish sentiment among institutional analysts, with 71% predicting gains in the coming week. Only 7% expected a decline, and 21% saw consolidation.
Retail traders were less enthusiastic. Out of 253 respondents, 58% expected gold to rise, 21% anticipated a decline, and another 21% foresaw sideways movement. With multiple central bank rate announcements ahead, traders across the board remain cautious.
Key Drivers: Geopolitical Fear, Central Banks, and Rate Speculation
Strategists Weigh In
- Rich Checkan (Asset Strategies International): “There is no doubt where gold is headed next week—up—given the Israeli attack on Iran.”
- Darin Newsom (Barchart.com): “Gold is benefiting from global instability, domestic uncertainty, and a potentially dovish Fed. Even tanks on Pennsylvania Avenue wouldn’t surprise me now.”
- Daniel Pavilonis (RJO Futures): “Gold has been tracking closely with oil. Both peaked when tensions escalated, then dipped as retaliation fizzled. Unless we see a sharper escalation, gold may remain range-bound.”
Pavilonis believes geopolitical tension is a short-term driver. “We’ve seen this pattern before—spike, then fade. Unless escalation resumes, gold might have already peaked for now,” he said.
Long-Term Themes: Gold’s Fundamental Strength
While immediate price action may be dominated by geopolitical headlines, long-term analysts focus on more structural drivers:
- Adrian Day (Adrian Day Asset Management): “This rally is built on solid ground—central bank diversification away from the U.S. dollar, strong demand from China, and concerns over global debt levels.”
He pointed out that U.S. retail participation has only just begun. “Gold ETFs like GDXJ are only now seeing inflows. If North American investors fully engage, there’s more room to run.”
Day also noted historic patterns: “Gold reacts strongly when already in a bull market and when conflict is seen as escalating. We’re seeing both.”
Central Bank Activity and Monetary Policy Outlook
Next week is critical for monetary policy watchers:
- Monday: Empire State Manufacturing Index
- Tuesday: U.S. Retail Sales
- Wednesday: Federal Reserve announcement and rate outlook
- Thursday: Bank of England and Swiss National Bank decisions (U.S. markets closed for Juneteenth)
- Friday: Philly Fed Manufacturing Survey
Marc Chandler (Bannockburn Global Forex) expects gold to challenge April highs, citing geopolitical stress and subdued rate expectations. “Gold is outshining even Treasuries and the dollar as the go-to safe haven,” he said.
He also predicts the Swiss National Bank will cut rates, possibly strengthening gold further.
Central Bank Buying Remains a Core Pillar
Alex Kuptsikevich (FxPro) highlighted gold’s growing share in global reserves:
- Central banks now hold 36,000 tonnes, nearing the 1965 record.
- Gold has surpassed the euro in reserve weighting (20% vs. 16%), trailing only the dollar (46%).
“Central banks purchased over 1,000 tonnes annually from 2022–2024. This trend shows no signs of reversing,” Kuptsikevich said.
He noted that geopolitical turmoil and a potentially dovish Fed are aligning to push gold higher.
Outlook: Targets and Cautions
- CPM Group maintains a Buy rating, with a near-term target of $3,500 by June 20, and a potential rise to $3,600 by September.
- Analysts warn that volatility remains high, and pullbacks below $3,200 seem increasingly unlikely unless conditions drastically improve.
Jim Wyckoff (Kitco): “Expect strong safe-haven demand to persist. Technicals are bullish.”
Day added a word of caution: “If you missed the high at $3,509, now might be the time to take partial profits.”
Conclusion: Gold Steadies for the Next Catalyst
While this past week’s drama has provided momentum, gold’s trajectory now hinges on whether global tensions escalate further and how central banks respond to evolving economic signals. With inflation cooling and interest rate cuts possible, the metal remains a strong contender for investors seeking safety—and upside.
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