Gold Surges on Geopolitical Tensions as Trump Threats Fuel Safe-Haven Demand
Spot Gold (XAUUSD) surged to its highest level in more than a week on Monday as geopolitical concerns drove speculative buying. Fueling the rally is the U.S. arrest and capture of Venezuelan President Nicolas Maduro. President Trump’s comments about Greenland and Mexico also fueled flight-to-safety buying.
At 14:39 GMT, XAUUSD is trading $4425.53, up $93.47 or +2.16%.
Trump Warns of Potential Military Action Against Colombia and Mexico
In a press conference on Saturday, Trump told reporters that another strike on Venezuela is possible if the new administration doesn’t cooperate. Trump also suggested that Colombia and Mexico could face military action if they do not reduce the flow of illicit drugs into the United States.
Denmark Enters “Crisis Mode” Over Greenland Remarks
Meanwhile, Denmark also moved into ‘crisis mode’ as Trump also set his sights on Greenland. Trump, who has long advocated for control over Greenland, reiterated his interest in taking over the mineral-rich Arctic territory.
“We need Greenland from the standpoint of national security,” Trump said Sunday on Air Force One after the U.S. strike on Venezuela.
This comment prompted the leaders of Greenland and Denmark to condemn the comments. Mujtaba Rahman, managing director for Europe at political risk consultancy Eurasia Group, said the Danish government is in “full crisis mode” over Trump’s latest comments.
Gold Price Forecast
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See all Gold forecastsSafe-Haven Buying Drives Retracement, Not New Highs
Gold is definitely benefiting from the events over the weekend. So far, however, the new geopolitical concerns and safe-haven buying have only been enough to fuel a normal retracement of last week’s steep sell-off and not enough to extend to a new all-time high.
Technical Outlook: Gold Tests Key Fibonacci Retracement Zone
Technically, the main trend is still up according to the daily swing chart despite last week’s steep decline. A trade through the record high at $4536.74 will signal a resumption of the uptrend. A move through the new swing bottom at $4274.02 will change the trend to down and likely lead to a test of the 50-day moving average at $4185.87.
The short-term range is $4536.74 to $4274.02. The market is currently testing its 50% to 61.8% retracement zone at $4405.38 to $4436.38. Trader reaction to this area is likely to determine the market’s long-term direction.
Key Levels to Watch: Bulls Need $4436.38 Break
A sustained move over the Fibonacci level at $4436.38 will signal the return of buyers. If this move creates enough upside momentum then we could see a near-term drive into the $4536.74 record high.
On the downside, the inability to overcome the 50% level at $4405.38 will indicate the presence of sellers. This could lead to increased selling pressure which will put $4274.02 back on the radar.
More Information in our Economic Calendar.
