Gold steadied around $5,177 on Friday, consolidating within this week’s range as traders weighed fading hopes for near-term Federal Reserve rate cuts against persistent geopolitical risk.
At the same time, the World Gold Council (WGC) argues that the metal’s recent strength is driven less by exuberance and more by hedging demand amid fragile underpinnings in risk assets and a market that remains structurally under-exposed to gold.
Prices consolidate, with policy and geopolitics in focus
XAU/USD hovered near $5,177 as sellers defended the $5,200 area, with the metal on track for a fourth consecutive weekly gain.
Markets are nearly certain the Fed will hold rates at its March and April meetings and have trimmed bets on a June cut, as officials signal inflation must cool more decisively before easing.
This repricing has supported the US Dollar and limited upside for bullion.
Geopolitical tensions also remain a key support.
The third round of indirect US-Iran nuclear talks in Geneva ended Thursday without meaningful progress, and Washington has increased its military presence in the region.
Iranian Foreign Minister Abbas Araghchi described the talks as “good” and “the most serious and longest,” adding that further technical discussions will be held next week in Vienna.
Uncertainty around US trade policy adds another layer, after a fresh 10% global tariff took effect this week following a Supreme Court ruling against the prior use of emergency powers to impose tariffs.
WGC’s case for gold: structural risks and under-ownership
In its report “Why gold in 2026?,” the WGC contends that despite strong returns in risk assets, the foundations look fragile.
Equities are trading at elevated forward multiples, credit spreads are compressed, and consensus GDP forecasts imply resilience that contrasts with historically high levels of economic policy uncertainty.
The council says this mix of high conviction in growth alongside extreme uncertainty is an environment where gold tends to thrive.
It adds that geopolitical frictions, narrow output gaps, and lingering inflation limit policymakers’ capacity to respond to future shocks, reinforcing hedging demand.
Also Read: Why gold may keep climbing despite record highs and consolidation
Weaker bond diversification and rising leverage risks
According to the WGC, gold is strategically under-owned.
Private gold investment as a share of global equities and bonds is barely above 2%, near the lower bound of an optimal 2%–8% allocation range.
Many institutional portfolios remain anchored to a 60/40 stock-bond mix, leaving only a modest role for gold.
The council also argues that bonds are less effective than before at cushioning equity sell-offs.
Inflation shocks in 2022 saw bonds and equities fall together, weakening the negative stock-bond correlation that previously supported diversification.
With core inflation still above targets and fiscal deficits expanding, upward pressure on yields could persist, further reducing bonds’ defensive value.
Debt is a “silent factor” as well.
US margin debt has surged, outpacing the S&P 500’s growth rate. Historically, outsized yearly increases in margin debt relative to equity returns preceded major bear markets, including the dot-com bust and the Great Recession.
Forced deleveraging in such periods has tended to boost safe-haven demand, a risk that could be amplified by what a recent Bank of America survey suggests is a lack of downside protection.
Technical picture and key levels
On the 4-hour chart, the near-term bias is mildly bullish to neutral with price holding well above the 100-period Simple Moving Average near $5,039.
Immediate support sits around $5,140, near the 61.8% Fibonacci retracement at $5,141 from the $4,402 low to the $5,598 all-time high.
A break below $5,038 could expose the 50% retracement at $5,000.
Resistance is clustered at $5,200–$5,250, followed by the 78.6% retracement at $5,342. A decisive move above $5,342 would point toward the $5,598 peak.
Momentum has cooled but remains constructive, with the Relative Strength Index near 55 and the Average Directional Index around 17 indicating a weak trend that may need fresh catalysts.
Flows and performance indicators
The broader backdrop remains supportive.
Gold is on track for a seventh straight monthly gain, helped by steady central bank purchases, solid ETF inflows, and ongoing geopolitical and economic uncertainty.
Year to date, SPDR Gold Shares (NYSE: GLD) is up 20.48%.
Looking over a longer horizon, gold has climbed 83% from roughly $2,800 per ounce last February to just under $5,200.
What to watch
Near term, the US Producer Price Index at 13:30 GMT could sway the Dollar and rates, setting the tone for the weekly close.
Developments around US-Iran talks, with technical discussions slated for next week in Vienna, will also be watched for safe-haven implications.
Bottom line
Gold’s near-term path may remain rangebound as markets reassess Fed timing and monitor geopolitical headlines.
According to the WGC, however, the metal’s recent strength reflects hedging against structural risks in markets where gold remains under-owned, rather than a momentum chase.
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