FX.co ★ Gold Has Reached Another Record High for Several Reasons

Prices of gold and silver hit record levels after the U.S. Department of Justice threatened the Federal Reserve with criminal prosecution, once again raising concerns about its independence. Protests in Iran supported the demand for safe-haven assets.

According to reports, the price of gold jumped to $4,600 per ounce, and silver approached $85 after Fed Chair Jerome Powell said that the potential charge should be viewed in the broader context of threats and ongoing pressure from the administration aimed at influencing the bank's interest-rate decisions. Repeated attacks on the Fed by the Trump administration last year were one of the main factors that weakened the dollar.

The dollar's weakness seen during today's Asian session led to a sharp rise in interest in precious metals as a safe-haven asset. Traders worried about political instability and potential risks to the financial system began moving assets into gold and silver, triggering an unprecedented spike in prices.

Meanwhile, deadly protests in Iran increased the attractiveness of precious metals as a capital refuge amid the possibility of the Islamic Republic's overthrow. U.S. President Donald Trump said on Sunday that he is considering possible options regarding Iran, while repeating threats to seize Greenland and questioning the value of the NATO alliance. All this took place just a week after the seizure of power in Venezuela under Nicolas Maduro.

Clearly, precious metals are now at the center of a powerful upward trend driven by a combination of favorable factors that significantly increased demand. These include lower U.S. interest rates, increased geopolitical tensions, declining confidence in the U.S. dollar, and the challenge posed to the Fed — all of which are contributing to higher gold and silver prices. More than a dozen asset managers reported that they decided not to withdraw too much from gold holdings, confident in their long-term attractiveness.

Future price dynamics for precious metals will depend on several factors, including the geopolitical situation, any actions by the Department of Justice regarding the Fed chair, and investor sentiment. In conditions of high uncertainty, it is extremely difficult to forecast the future, but it is clear that gold and silver will continue to play an important role in the global financial system as tools for risk protection and capital preservation.

Technical picture for gold

From a technical standpoint, buyers need to take the nearest resistance at $4,591. That would allow targeting $4,647, above which a breakout will be quite difficult. The farthest target is the $4,708 area. In the event of a decline, bears will aim to take control of $4,531. If they succeed, breaking that range would deal a serious blow to bull positions and push Gold toward the $4,531 low with a prospect of moving down to $4,481.