Gold prices are holding close to their all-time high this week, buoyed by growing expectations that the Federal Reserve will begin cutting interest rates before year-end. Rising geopolitical tensions between Washington and Beijing have further reinforced investor appetite for the metal, traditionally seen as a hedge against uncertainty.

Fed Policy Shift Fuels Gold Momentum

The latest rally in gold reflects a shifting macroeconomic landscape. With recent US inflation data showing signs of moderation and job growth cooling, traders are betting that the Fed will deliver its first rate cut in December. Futures markets now imply a near 80% probability of a reduction, according to CME’s FedWatch tool.

Spot gold traded around $2,485 per ounce, just below its record of $2,520 set earlier this month. The lower yields on US Treasuries—particularly the 10-year, which dipped below 4.1%—have made non-yielding assets like gold more attractive. “The Fed is approaching a critical inflection point, and gold is responding as investors prepare for a looser policy regime,” said analysts at Saxo Bank in a note.

Safe-Haven Demand Strengthened by US-China Strains

Beyond monetary policy, gold’s resilience has been underpinned by geopolitics. The renewed tensions between the United States and China—centered on trade restrictions and technology exports—have amplified risk aversion across global markets. Beijing’s latest warnings about potential retaliatory measures over semiconductor curbs added to investor unease.

Asian markets turned volatile this week, and the dollar index briefly weakened to **99.20**, adding tailwinds for gold denominated in the greenback. Historical patterns suggest that prolonged geopolitical friction often drives institutional investors to diversify into commodities and physical assets.

Global Market Impact and Investor Positioning

Exchange-traded funds (ETFs) linked to gold have also seen steady inflows, reversing months of outflows during 2024’s tightening cycle. According to Bloomberg data, global gold ETF holdings rose by **15 tonnes** in the past two weeks, marking the strongest accumulation since early 2023. Meanwhile, central banks—particularly in emerging markets—continue to expand their reserves, reinforcing long-term structural demand.

In Israel and other inflation-sensitive economies, gold’s strength has become a key reference point for hedging strategies. Local traders note increased retail and institutional interest amid concerns about global monetary easing and the shekel’s relative weakness against major currencies.

What to Watch Next

The next major test for gold will come with upcoming US retail sales and inflation reports, which could determine whether the Fed confirms a December rate cut. If bond yields continue to soften and geopolitical risks persist, analysts say gold could decisively breach its record highs. However, a surprise rebound in inflation or a hawkish Fed tone could trigger short-term corrections.

Still, in an environment marked by rate uncertainty, geopolitical friction, and uneven global growth, gold’s dual appeal as both a hedge and a momentum asset remains firmly intact.