Gold has recovered quickly at the start of this week. The live TV argument between Trump and Zelensky late in Friday’s session triggered a turnaround. Following that, gold opened with a gap up, settled on the 21-hour moving average, and has been riding it to higher levels. The Ukraine-related argument has fueled distrust not only in Europe but also in Taiwan. Over the weekend, Zelensky and European leaders met to seek solutions, while the U.S. decided to completely cut off aid to Ukraine. 

However, gold’s movement is not solely driven by the Ukraine situation—three key factors are fueling its rally this week. The first is tariffs. The U.S. has imposed 25% tariffs on Mexico and Canada and 20% tariffs on China, prompting immediate retaliatory measures from both countries. Trump also stated that today would be a “big day” ahead of a congressional meeting, leaving markets on edge about what he might reveal. 

The second factor is the looming government shutdown. The U.S. Congress has two weeks to reach an agreement before the government faces a shutdown. Historically, gold has risen in the final two weeks leading up to shutdown deadlines, adding to the current upward pressure from geopolitical and economic risks. 

The third factor is growing concerns about stagflation. Recent U.S. economic data increasingly points in that direction. The latest example was yesterday’s ISM Manufacturing report, which showed a sharp increase in “prices paid” while “employment” and “new orders” fell below the 50 level. If inflation continues to stay high or even rise amid slowing growth, it could pose significant risks to the U.S. economy. 

Additionally, there is a less-discussed but emerging factor: the end of the Hamas-Israel deal. Israel seeks to extend the first phase of the deal and maintain a big presence in Gaza, while Hamas wants to move forward with the next phase as originally planned. If no agreement is reached soon, the conflict could escalate again. With Trump’s full backing, Israel might take a bolder stance, increasing the risk of broader regional instability. While this may not impact gold in the short term, it could become a significant factor in the medium term.  

(Gold -1H Chart) 

In light of positive fundamentals, gold has broken the 2895 resistance and formed a short-term uptrend channel. The upper line of the trend channel and the 2920 horizontal resistance may limit further advances today, but as long as the 21-hour moving average holds, any pullback in gold price remains a buying opportunity. The ultimate short-term target is the 2943-2955 zone for now. A break above 2920 or a retest and bounce from 2895 could both lead to the same target. However, if the uptrend breaks to the downside, a re-evaluation of the chart may be necessary.