Gold Surges Again: Nearing $3,000 Amid Global Uncertainty

Research Strategist

17 Mar 2025

Gold prices have once again captured investors' attention, approaching the psychologically significant $3,000 per ounce level at the start of this week. At its peak, the precious metal briefly hit $3,001, before pulling back again below the 3k mark, keeping it close to its all-time highs.

The recent strength in gold comes as no surprise given the rising global economic uncertainty, driven by substantial geopolitical risks and the complex situation surrounding U.S. monetary policy. The market continues to show a strong appetite for safe-haven assets, especially in anticipation of the U.S. Federal Reserve's announcement this week, which will be crucial.

While market consensus expects the Fed to keep interest rates unchanged, the focus will be on Jerome Powell’s comments and economic projections. The key question is how the Fed Chair will balance the growing recession narrative with a return to a disinflationary path, in a context where long-term inflation expectations appear to be derailing.

A more dovish stance from Powell could boost non-yielding assets like gold, while also reviving risk appetite, indirectly benefiting stock markets. On the other hand, a more hawkish tone could strengthen the U.S. dollar, temporarily pressuring gold prices.

Geopolitics remains a significant catalyst for gold. The escalation of conflict in the Middle East, particularly with the U.S. reaffirming its commitment to countering the Houthis in Yemen, has investors on high alert. Any further escalation in this region would likely increase demand for gold as a hedge against broader risks.

Conversely, a potential ceasefire agreement with Russia could provide short-term relief, partially easing the upward pressure on gold prices. However, any major diplomatic setback could once again trigger risk aversion and push gold to new record highs.

The structural demand for gold remains strong. Central banks, led by China, have extended their gold purchases for the fourth consecutive month, while gold-backed ETFs continue to see positive inflows, reinforcing the medium-term bullish outlook for the metal.

In summary, as the market awaits the Fed’s next move, gold prices seem destined to remain in the spotlight, acting as a precise barometer of market sentiment amid the multiple uncertainties defining today’s economic and political landscape.

Gold Weekly Chart:

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