The divide between the West and the East is deepening. US pressure on Venezuela, Russia, and Iran is pushing China to respond, making countries rely less on the US dollar and spread their reserves across other assets. Let’s discuss this topic and make a trading plan for the XAU/USD.
The article covers the following subjects:
Major Takeaways
- US pressure on Eastern countries is supporting XAUUSD.
- Weaker confidence in the dollar favors gold.
- Gold is turning into an anti-fiat currency.
- Consider long trades, targeting 4,730 and 5,050.
Monthly Fundamental Forecast for Gold
Gold faces a perfect storm. The rift between East and West is growing, and mistrust is spreading within the US. Lawsuits against Jerome Powell, threats to Federal Reserve independence, and the Supreme Court’s readiness to overturn US tariffs are driving investors to diversify. Precious metals, which soared in 2025, are becoming the top alternative to securities.
Following reports that the Venezuelan president was forcibly detained, Donald Trump sharply criticized Iran, citing mass protests and deadly crackdowns that have drawn strong condemnation from Washington. The US administration announced plans to impose additional 25% tariffs on countries doing business with Tehran. The move would primarily affect China, which accounts for roughly 90% of Iranian oil exports. Meanwhile, markets are also buzzing with speculation that Washington may introduce new sanctions against Moscow over delays in the Ukraine peace process.
Gold and Brent Price Performance
Source: Trading Economics.
China, Venezuela, Iran, and Russia are all part of the Eastern bloc, and mounting pressure on these countries is accelerating de-dollarization and the diversification of gold and foreign exchange reserves. Strong central bank demand for bullion remains a key driver behind the rally in the XAU/USD pair. At the same time, rising oil prices risk fueling another wave of inflation, reinforcing gold’s traditional role as a hedge against price pressures.
Declining confidence in the US dollar is another bullish driver for gold. Against this backdrop, reports of legal pressure on Jerome Powell helped drive gold prices to fresh record highs. Fears over a loss of Federal Reserve independence raise the risk of aggressive rate cuts, which would further weaken the greenback. Meanwhile, the US administration’s tariff policy is expected to reduce budget revenues by hundreds of billions of dollars, increasing the national debt. Unsurprisingly, investors are once again turning to debasement trades, while speculative interest in XAU/USD remains well below historical extremes.
Speculative Positions in Gold
Source: SaxoGroup, Bloomberg.
Morgan Stanley calls gold an anti-fiat currency and is ready to increase its share in the investment portfolio to 20%. The classic portfolio, where 60% is allocated to stocks and 40% to bonds, is no longer in vogue as the correlation between stocks and bonds continues to rise.
If other major banks, hedge funds, and asset managers follow suit in reshaping their portfolios, the XAU/USD pair may surge to 5,000. State Street Investment Management sees a 30% chance of the gold price reaching 5,000 by the end of 2026. Citigroup anticipates this level being reached within three months.
Monthly Trading Plan for XAUUSD
If Donald Trump succeeds in removing FOMC Governor Lisa Cook by court order, gold will gain an additional boost. Thus, consider long trades during pullbacks targeting $4,730 and $5,050.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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