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At the beginning of the new week, gold prices have risen due to escalating geopolitical risks following the intensification of the conflict in the Middle East and the joint strikes by the US and Israel on Iran. Initially aimed at eliminating Iranian Ayatollah Ali Khamenei, the operation has extended beyond its local target. In response, the group Hezbollah attacked Israel, prompting return fire, while Tehran launched missiles and drones at Israel, Gulf countries, and a British airbase near Cyprus.
US President Donald Trump stated that the military campaign is proceeding according to plan. "We are achieving great results," he noted in an interview with CNN. When asked about potential timelines for completing the operation, Trump suggested the war could last about 4 weeks, adding that events are moving "ahead of schedule."
The escalation of the situation in the Middle East, coupled with the lack of progress in peace talks between Russia and Ukraine, heightens market uncertainty, which supports interest in gold as a safe-haven asset. Additional price growth has been fueled by oil price spikes, which heighten inflationary concerns and strengthen the dollar. The US Dollar Index (DXY), which tracks the US dollar against a basket of six currencies, has risen.
The rise in gold prices is also linked to expectations of a more dovish stance from the Federal Reserve. Speculation regarding future monetary policy easing supports the precious metal. According to Prime Market Terminal, money markets currently estimate the potential rate cut from the Fed at 49 basis points compared to 61 basis points a week earlier.
Market participants remain confident that the Fed will cut interest rates at least twice in 2026.
According to data from the Institute for Supply Management (ISM), the manufacturing PMI index in February remained above the neutral level, registering at 52.4 points compared to 52.6 in January. The subcomponent "Prices Paid" rose to a three-and-a-half-year high, indicating the impact of import tariffs on production costs.
Analysts at BNP Paribas emphasize that physical demand for gold remains the key driver in the market this year. This year, gold-backed ETFs have accumulated 2 million such funds, and it is expected that Chinese investors will make more purchases this year than last year.
From a technical standpoint, the bullish sentiment for gold remains, but price dynamics suggest bulls are taking profits, as the precious metal has retreated from four-week highs above the round $5,400 level. Momentum remains positive, as indicated by the RSI (Relative Strength Index), which remains in positive territory and is far from being overbought.
Once gold breaks through the four-week high, it will encounter resistance at the level of $5,455, followed by all-time highs around $5,600.
Conversely, if gold falls below the round $5,300 level, the first support level will be the daily high on February 27 at around $5,279, followed by $5,250. The next support level will be the round level of $5,200.
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