Gold price surge: How high can it ride the risk-off wave?

Gold is having a moment - again - and the reasons are anything but surprising. As global tensions flare and economic uncertainty clouds the outlook, investors are doing what they’ve always done in times of turmoil: seeking shelter in the world’s oldest safe haven.

This week, gold (XAU/USD) surged over 2%, rebounding from recent lows near $3,200 to trade above $3,320. The move is hardly surprising. Between geopolitical flashpoints, erratic trade policy, and nervous markets, gold is once more proving that it thrives in the chaos.

Gold nears record high on geopolitical concerns

Much of the recent demand is driven by the volatile geopolitical landscape. The conflict between Russia and Ukraine remains unresolved, with President Vladimir Putin declaring that Russia has the means to bring the war to a "logical conclusion" as he announced a short-term ceasefire. 

Meanwhile, the Middle East is teetering on the edge, following a ballistic missile strike on Israel’s Ben Gurion Airport by Houthi rebels. Israel’s Prime Minister, Benjamin Netanyahu, has promised retaliation and warned Iran of consequences, while Iran has vowed to respond if provoked. These developments are keeping geopolitical risk elevated - and gold loves risk.

Adding to the instability, former US President Donald Trump continues to make headlines. Over the weekend, he unveiled a 100% tariff on foreign-produced films and even floated the idea of potential military action to seize control of Greenland. Markets, unsurprisingly, are unsettled by this unpredictable rhetoric, especially as it coincides with growing uncertainty about the direction of US economic policy.

The fed holds steady as markets brace for impact

While international headlines dominate, domestic policy is playing its part too. Trump has once again criticised the US Federal Reserve and its chairman, Jerome Powell, calling him “stiff” and urging the central bank to cut interest rates. The Fed, however, appears to be standing firm for now. 

According to CME’s FedWatch Tool, there is only a 4.4% chance of a rate cut at this week’s meeting.

This ongoing tension between political pressure and central bank caution is leaving the US dollar subdued and Treasury yields restrained - both of which support the gold price. Despite some upbeat economic data, including a stronger-than-expected April jobs report and a rise in US service sector activity, markets remain uneasy.

In fact, the ISM’s Prices Paid index surged to its highest level since February 2023, suggesting inflationary pressures may be resurfacing. All of this contributes to an environment in which gold can thrive. Technically, the metal has cleared key resistance and now appears poised to test higher levels. 

A move towards $3,400 - or even $3,500 - would not be out of the question if geopolitical tensions deepen or if the dollar continues to weaken. That said, any unexpected shift from the Fed or a sudden de-escalation in global conflicts could prompt a pullback. For now, though, the momentum is with the bulls.

Bitcoin cools, but institutional confidence grows

Of course, gold isn’t the only so-called safe haven in play. Bitcoin, often described as “digital gold”, is navigating its own storm.

After rallying earlier this month, BTC has retreated to around $95,000, down from recent highs near $97,700. On-chain data suggests many investors are locking in profits, contributing to the recent dip. Metrics like Santiment’s Network Realised Profit/Loss and Glassnode’s MVRV ratio point to a consolidation phase, with the latter falling back to 1.74 - historically associated with cooling periods.

Still, the institutional appetite for Bitcoin appears undiminished. Bitcoin ETFs recorded $1.8 billion in inflows last week alone, continuing a three-week streak that has drawn in $5.5 billion in total. Strategy, a Bitcoin-focused firm, purchased nearly 1,900 BTC for $180 million and raised its 2025 performance targets, while Semler Scientific and Thumzup Media also ramped up their holdings. This steady stream of institutional buying suggests confidence in Bitcoin’s long-term trajectory, even as retail investors take profits in the short term.

So, how far can gold ride this risk-off wave? If current trends persist, the metal may be on course to break new ground. While the journey won't be without volatility, the underlying forces - rising global tensions, political pressure on central banks, and persistent economic uncertainty - continue to favour gold.

As for Bitcoin? It may be wobbling, but with heavyweight backers piling in, its next move might not be far behind.

In a world where unpredictability is the new normal, gold’s quiet strength is making plenty of noise.

Gold price forecast 

At the time of writing, Gold has surged past $3,300, with bullish pressure evident. A recent bullish crossover adds to the bullish narrative, though the volume bars hint that buy pressure could be potentially slowing down. Should the upward movement continue, prices could find resistance at the $3,385 and $3,500 all-time highs.

Bitcoin, on the other hand, has been in correction mode, with recent sell pressure evident on the daily chart. Volume bars indicate strong buy interest remains, though it could be waning. Should prices continue sliding, prices could find support at $93,000 and $80,000 in case of a collapse. 

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