February 19, 2025 – Gold prices continued to rise on Tuesday, with XAU/USD breaking past $2,950 to reach a new yearly high, currently trading near $2,962. Amid increasing uncertainty over the Federal Reserve’s monetary policy and escalating geopolitical risks, global investors have turned to gold as a safe-haven asset. Additionally, a weaker U.S. dollar and declining Treasury yields have further fueled gold’s upward momentum.

Key Drivers Behind Gold’s Rally

1. Rising Expectations for Fed Rate Cuts

With signs of economic softening, market expectations for a Fed rate cut in 2025 are gaining traction. U.S. retail sales dropped 0.4% in January, while core inflation eased to 3.8% year-over-year, reinforcing the case for potential rate adjustments. The upcoming Fed meeting minutes will be closely watched for further signals.

2. Weakening U.S. Dollar Boosts Gold

The U.S. dollar index (DXY) has been on a downward trend, recently falling to 103.7 after four consecutive days of losses. As gold is priced in dollars, a weaker greenback makes the metal more affordable for global investors. Meanwhile, U.S. Treasury yields have also declined, with the 10-year yield dropping to 4.45%, providing additional support for gold.

3. Geopolitical Tensions Drive Safe-Haven Demand

Ongoing global uncertainties, including rising tensions in the Middle East and heightened trade disputes, continue to fuel risk aversion. As a traditional safe-haven asset, gold benefits from this shift in sentiment, pushing prices higher.

Global Policy and Geopolitical Impact on Markets

International policies and geopolitical developments have a profound effect on financial markets. By staying up-to-date with global events, traders can better gauge market direction and capitalize on investment opportunities. Being informed enables traders to make quicker, more strategic decisions, positioning themselves ahead of market shifts.

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