## Dollar weakness and uncertainty drive gold prices to record highs

The gold price rally continues unabated: The XAU/USD climbs to around $4,555 in early Asian trading on Monday, marking a new all-time high. Several powerful factors are behind this impressive development, prompting investors increasingly to seek this safe haven.

**Geopolitical uncertainties fuel gold demand**

The global political situation remains tense. The USA is considering military options against Iran after deadly unrest broke out there. Meanwhile, the UK and Germany plan to strengthen their military presence in the Arctic – a signal that tensions between the major powers are increasing. These worldwide conflicts and uncertainties make gold, as a traditional safe asset, extremely attractive. Investors are fleeing into the protection of this non-yielding but crisis-proof precious metal.

**Labor market data weaken – interest rate cuts move closer**

A surprisingly weak US labor market report for December fuels new hopes for interest rate cuts. The US recorded only 50,000 new jobs instead of the expected 60,000 – a significant decrease compared to the revised 56,000 from November. Even more indicative: the unemployment rate fell from 4.6% to 4.4%, increasing market expectations of monetary easing by the Federal Reserve.

**Lower interest rates are poison for the dollar, balm for gold**

This is where the connection between dollar weakness and gold price strength lies: if the Fed cuts its key interest rates, the yield on dollar investments also falls. This suddenly makes gold, as a non-interest-bearing alternative, more attractive. Additionally, a weaker dollar pushes down the price of gold traded in greenbacks – theoretically. But in this case, the flight capital effect dominates: investors accumulate gold because they are betting on instability, not yields.

**CPI data on Tuesday could provide new impulses**

Traders and analysts are eagerly watching the US Consumer Price Index (VPI), to be released on Tuesday. A lower inflation rate would further increase the chances of interest rate cuts and could push gold prices to new record highs. The combination of political uncertainty, a weak labor market, and declining inflation creates the perfect environment for further rising gold prices in dollars.