Gold (XAU/USD) surged to an all-time high of $3,005 per troy ounce during Asian trading on Tuesday, as investors sought safe-haven assets amid escalating geopolitical tensions and trade concerns.
Geopolitical Risks Fuel Demand
Market volatility increased after the U.S. reaffirmed its military campaign against Yemen’s Houthis, vowing continued strikes until attacks on Red Sea shipping cease. President Donald Trump warned that Iran would be held responsible for any Houthi-led assaults, further heightening tensions in the Middle East.
On Sunday, the Houthis launched a large-scale attack involving 18 ballistic and cruise missiles, along with drones, targeting the USS Harry S. Truman and its escorting warships in the northern Red Sea. Meanwhile, Israeli forces carried out intense airstrikes on Hamas targets in Gaza, reportedly killing at least 30 people in what has been described as the most severe attacks since the January 19 ceasefire.
Trade War Concerns Add to Market Uncertainty
Investor sentiment was further shaken by renewed trade war tensions, as the U.S. and key trading partners exchanged fresh tariff threats. The heightened economic uncertainty drove strong demand for gold, with continued purchases from exchange-traded funds (ETFs) and central banks—most notably China, which has extended its gold acquisitions for a fourth consecutive month.
Focus on Fed Policy Decision
Looking ahead, investors are closely watching central bank policy meetings, particularly the U.S. Federal Reserve’s decision later this week. While the Fed is expected to keep interest rates steady amid global uncertainty, markets are pricing in only two rate cuts this year, reflecting concerns over inflation and trade disruptions.
