Gold (XAUUSD) Price Forecast: Safe-Haven Demand Lifts Gold Price as Rate-Cut Odds Dip

Gold Edges Higher on Safe-Haven Demand as Iran Tensions Overshadow Fed Uncertainty

Spot gold (XAUUSD) is edging higher on Friday as traders reacted to mixed economic data and the threat of a war between the United States and Iran. Since the odds of a June rate cut dropped from 50.2% to 46.8% after the reports, I have to chalk up today’s gains to safe-haven buying.

GDP Disappoints, Inflation Holds Firm, Putting the Fed in a Tough Spot

Today’s data showed U.S. economic growth cooled considerably in the fourth quarter of 2025 while inflation remained elevated above the Fed’s mandated target. This news made it more difficult for the Fed to justify an interest rate cut. It also helped support the U.S. Dollar, which weighed on foreign demand for dollar-denominated gold. However, this assessment was outweighed by the geopolitical concerns out of the Middle East.

The details show that gross domestic product (GDP) rose at a meager annualized rate of just 1.4%, according to the Commerce Department. This was well below the forecasted 2.5% gain. Meanwhile, inflation held firm in December, based on the Fed’s favorite indicator, the core personal consumption expenditures price index (PCE). It rose 3% as expected, maintaining its position above the Fed’s 2% target.

Geopolitical Risk Trumps Rate Cut Odds as the 10-to-15-Day Clock Ticks

Spot gold traders appear to be putting more emphasis on the geopolitical events rather than the odds of a Fed rate cut in June. This is likely because a war between the United States and Iran could be triggered within the next 10 to 15 days while conditions could change enough to alter the Fed’s plans in June.

Just a month ago, speculators would have probably taken gold sharply higher at the mere mention of a war between Iran and the U.S. However, the absence of aggressive speculators, Fed uncertainty, and low liquidity due to the Asian New Year may be preventing a spike in prices. As we approach the end of President Trump’s 10-to-15-day warning period, traders could become more agitated, leading to heightened volatility and higher prices.

A Peace Deal Could Flip the Script and Trigger a Sharp Selloff

If a deal is struck between the United States and Iran before a war begins, gold could drop dramatically because it would no longer have the safe-haven bid, and the diminished chances of a June rate cut and a stronger U.S. Dollar could encourage aggressive selling of the metal.

Technical Outlook: $5002 Is the Pivot — Upside Targets $5119 and $5143

Technically, gold is trading on the strong side of a short-term pivot at $5002.31, putting it in a position to challenge the recent top at $5119.35 and the Fibonacci level at $5143.89. The latter is also a trigger point for an acceleration to the upside.

Traders face downside risks if $5002.31 fails as support. The nearest targets are pivots at $4760.87 and $4744.34. The 50-day moving average at $4705.42 also remains a valid target. It’s also a value price, which means a test of this indicator could attract new buyers.

More Information in our Economic Calendar.