Gold tends to perform well when real interest rates (nominal rates minus inflation) decline or remain negative. This is because gold, a non-yielding asset, becomes relatively more attractive compared to fixed-income securities that offer lower inflation-adjusted returns.

As of now, if inflation expectations remain sticky or rise, while central banks (especially the Fed) hint at rate cuts or pause tightening due to slowing growth or financial instability, real yields could decline, supporting gold prices.

Geopolitical Uncertainty: Conflicts (e.g., Ukraine, Middle East, Taiwan Strait) and global elections (US, UK, India) increase demand for safe-haven assets.

Weakening USD: If the dollar weakens due to dovish Fed policy or a deteriorating fiscal outlook, gold (priced in USD) becomes cheaper for foreign buyers, increasing demand.

Central Bank Buying: Emerging market central banks, notably China and Russia, are diversifying reserves away from USD into gold.

LONG XAUUSD

May 27 2025