Gold Price Prediction: Will XAU-USD Reach $5,000 Level Before the Year End?
Gold's dramatic spike to $4,379 last week reflected a flight to safety amid policy uncertainty and U.S.-China trade tensions, as buyers...
Quick overview
- Gold prices surged to $4,379 last week amid U.S.–China trade tensions and policy uncertainty, despite a sharp $200 intraday drop.
- The Federal Reserve's shift towards a more accommodative policy has increased demand for gold as a safe-haven asset.
- Central banks are accumulating gold at unprecedented levels, indicating a significant shift in global reserve strategies.
- Ongoing geopolitical risks and seasonal demand are expected to support gold prices, with analysts predicting potential highs of $5,000 by 2025.
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Gold’s dramatic spike to $4,379 last week reflected a flight to safety amid policy uncertainty and U.S.-China trade tensions, as buyers swiftly recovered from a $200 intraday decline.
Gold’s Rally Fueled by Fed Policy and Trade Turbulence
Gold prices experienced a wild ride last week, climbing from around $4,000 to $4,379 before tumbling by nearly $200 in a single day as tariff fears briefly eased. Despite the sharp correction, the broader uptrend remains strong, supported by renewed expectations of Federal Reserve rate cuts and persistent geopolitical uncertainty.
XAU Chart Weekly – The Upside Momentum Has Exploded Since August
The Fed’s latest policy pivot toward a more accommodative stance has reignited demand for non-yielding assets such as gold, reinforcing its appeal as both a hedge against inflation and a store of value amid volatile market conditions. Analysts now suggest the metal could test $5,000 before the end of 2025 if global risk sentiment continues to remain fragile.
Tariff Shock Reignites Safe-Haven Demand
Friday’s volatility followed remarks from President Donald Trump, who announced a 100% tariff on Chinese imports effective November 1, 2025. The move sparked a wave of selling across equities and cryptocurrencies, driving investors back toward safe-haven assets.
Gold swiftly regained the $4,000 level, reaffirming its position as a geopolitical shock absorber. The quick recovery highlighted that while panic selling may spark short-lived corrections, underlying demand for stability continues to fuel strong support for the metal.
Seasonal and Geopolitical Drivers Add Tailwinds
Demand for physical gold is also expected to rise in the coming weeks as India’s festive season begins—a period traditionally associated with high jewelry and investment purchases.
Beyond seasonal factors, broader geopolitical developments—including U.S. budget negotiations, the Russia–Ukraine peace discussions, and ongoing global trade friction—are set to play a key role in shaping near-term price movements. These overlapping forces keep volatility high but also sustain gold’s safe-haven appeal.
Central Banks Anchor the Long-Term Trend
Behind the market noise, central bank accumulation remains a structural pillar of gold’s long-term rally. For the first time since 1996, central banks collectively hold more gold than U.S. Treasuries, signaling a deeper shift in global reserve strategy.
China, for instance, has increased gold holdings to 8.5% of total reserves—still well below the global average of around 20%, leaving significant room for further diversification. Consistent buying from Asia and the Middle East underscores a deliberate move away from U.S. dollar dependence, strengthening gold’s fundamental foundation.
Outlook: Volatility Masks a Durable Uptrend
Short-term pullbacks are likely as traders lock in profits, but the macro environment remains firmly supportive. Persistent geopolitical risk, a looming U.S. government shutdown, and upcoming CPI inflation data continue to shape expectations for monetary policy and inflation.
With the Fed turning dovish, central banks remaining net buyers, and investors increasingly wary of traditional assets, gold’s long-term trajectory points decisively higher. The recent turbulence may prove to be a pause before another leg up, potentially paving the way for new record highs by year-end.
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