By Daniela Sabin Hathorn, senior market analyst at Capital.com

Gold prices have staged a notable resurgence over the past week, as geopolitical tensions once again dominate investor sentiment, highlighting gold's enduring appeal as a traditional safe haven in times of global instability. However, the initial uptick, observed last week, found resistance near the $3,440–$3,450 zone on Monday—historically a ceiling for gold’s recent rallies.

Gold (XAU/USD) daily chart

Past performance is not a reliable indicator of future results.

The move reflects renewed caution among investors following heightened concerns in the Middle East and global markets more broadly. As fear-based sentiment replaced the optimism seen earlier in June, capital flowed back into gold, underlining its role as a protective hedge.

From a technical standpoint, gold’s Relative Strength Index (RSI) has shown resilience—avoiding a dip below the midline and recovering into bullish territory this week. Although some selling pressure remains near resistance levels, momentum appears poised for further short-term upside. Structurally, the outlook remains bullish. All the tailwinds at the moment are pointing in that direction—trade, U.S. fiscal policy, and now geopolitics.

Importantly, if U.S. inflation continues to cool while growth weakens and converges with other major economies, the dollar could face renewed downward pressure. A softer dollar typically supports gold prices, adding another layer to the bullish thesis.

Macro narratives support gold

Several macroeconomic factors continue to reinforce gold’s long-term potential. Escalating geopolitical instability has revived demand for gold as a traditional safe haven, with investors seeking protection amid rising global tensions. Simultaneously, softer inflation data has fuelled expectations of a more dovish stance from central banks, especially as economic growth shows signs of slowing. Additionally, the ongoing global trend of de-dollarization—marked by increasing diversification away from reliance on the U.S. dollar—is quietly supporting structural demand for gold, further solidifying its role as a long-term store of value.

At this point, it’s really hard to argue for a bear case in the bigger picture as the fundamentals support gold in the long-term. However, some near-term caution is warranted. Resistance near $3,400–$3,440 remains a tough barrier, and past rallies toward $3,500 have struggled to hold. A hawkish pivot from the Federal Reserve or a breakthrough in global trade negotiations could potentially dampen gold's appeal.

Silver’s Dual Role aids its recovery
Silver, which had shown surprising strength since the start of June, saw a shift in momentum midweek. While initially buoyed by both safe haven flows and improving risk sentiment, silver has since retreated as geopolitical concerns dampened the “risk-on” appetite.

This dual nature of silver—as both an industrial metal and a partial safe haven—makes it especially sensitive to broader economic narratives. Its price had been supported not just by market optimism and improving equities, but also by ongoing supply tightness and structural shortages that have gained renewed attention.

However, as sentiment pivoted back to risk aversion, gold overtook silver in performance. The gold-silver ratio widened again, suggesting that investors are recalibrating toward the more traditional hedge offered by gold amid mounting geopolitical uncertainty.

Silver (XAG/USD) daily chart

Past performance is not a reliable indicator of future results.

That said, market sentiment is proving to be resilient this week despite continued attacks in the Middle East. Equities managed to regain some ground on Monday, accompanied by silver, showing that risk appetite was back on the table. On Tuesday morning, stocks are struggling as news broke on Monday evening that President Donald trump had ordered the evacuation of the city of Tehran on the basis that the country had rejected a deal to curb the development of nuclear weapons, as the conflict between Israel and the Islamic Republic appeared poised for further escalation.

However, silver has managed to keep the upper hand. This is likely because the situation is not considered bad enough for a full-blown safe haven rally, but confidence is diminishing. In these conditions, silver is able to take advantage.