Gold pushes toward record territory on safe-haven demand

Spot gold pushed to its highest level in seven weeks on Monday, extending a rally that has taken the metal within striking distance of its all-time high as easing real yields and persistent safe-haven demand combine to keep bullion firmly bid. XAU/USD traded as high as $2,438 an ounce during the London session before consolidating into the New York close, with dealers describing flows as steady rather than frantic — the kind of grinding, broad-based buying that tends to characterise structural rather than purely event-driven rallies.

The clearest driver has been the retreat in real yields, which move inversely with gold given the metal's lack of a coupon. Ten-year Treasury Inflation-Protected Securities yields have fallen close to 25 basis points over the past month as rate-cut expectations have been pulled forward, lowering the opportunity cost of holding a non-yielding asset and providing the single biggest tailwind behind the current leg higher.

Central bank demand has continued to underpin the market in the background. Data from the World Gold Council shows official sector purchases running well above their five-year average pace, with reserve managers across several emerging markets continuing to diversify away from dollar-denominated assets. That buying has proven remarkably insensitive to price, a pattern dealers say has changed the character of dips over the past two years — pullbacks that once ran for weeks now tend to find support within days as central bank bids reappear.

Exchange-traded fund flows, which had been a persistent drag on the market through much of the first half of the year as Western institutional investors trimmed exposure, have turned positive for the first time in five months. Holdings in the largest gold-backed ETFs rose for a second straight week, suggesting that at least part of the recent rally is now being driven by investors who had been on the sidelines returning to the trade rather than by central banks and Asian retail demand alone.

Geopolitical considerations have added a further layer of support. Ongoing tensions in several regions have kept a bid under traditional safe-haven assets, and gold has benefited alongside the Swiss franc and, to a lesser extent, the Japanese yen. Options markets show a persistent skew toward calls, with risk reversals at their most bullish in over a year — evidence that traders are positioning for further upside rather than treating current levels as a ceiling.

Technically, $2,450 stands as the key resistance separating price from a fresh all-time record. A clean break above that level on strong volume would likely trigger a fresh wave of momentum buying and short covering, with the next meaningful resistance not clearly defined until the psychological $2,500 mark. On the downside, the rising 21-day moving average near $2,380 has provided consistent support during the current leg, and a break below it would be the first technical sign that the rally is losing momentum. For now, with real yields falling and both central banks and Western investors buying at the same time, the path of least resistance remains higher.