By Dat Tong, Senior Financial Markets Strategist at Exness
Gold surged to a new all-time high on Monday, supported by an increasingly fragile geopolitical backdrop and mounting concerns over the independence of the US Federal Reserve. Heightened safe-haven demand followed fresh tensions in the Middle East. In Latin America, risks remain elevated, even as tentative diplomatic efforts emerge. Meanwhile, hostilities in Eastern Europe persist, reinforcing gold’s appeal.
From another perspective, gold is also benefiting from deepening concerns over political pressure on the Federal Reserve. Federal prosecutors have reportedly opened a criminal investigation linked to the renovation of the Fed’s headquarters, with Chair Jerome Powell now under scrutiny. The threat of legal action risks undermining monetary policy, reviving fears of political interference.
Furthermore, strong institutional demand continues to underpin prices, with gold ETFs recording 23 tonnes of inflows in the week ending 26 December, the largest since mid-October, with all regions posting net gains. Central banks also continued their purchases, further supporting gold.
Markets could turn to new data to assess the direction of monetary policy. Job market and inflation data releases tomorrow could affect expectations and drive the direction of the gold market.