Gold prices surged past the $3,000 mark, hitting a record high of $3,038 on Tuesday, amid uncertainty surrounding U.S. President Donald Trump’s impending tariffs and the Federal Reserve’s upcoming monetary policy decision. As of the latest trading, XAU/USD stands at $3,037, up 1.20%.
Despite a slight easing of market stress following talks between Trump and Russian President Vladimir Putin—during which Putin agreed to halt attacks on Ukrainian energy facilities for 30 days—risk appetite remains low. According to Reuters, the precious metal has gained more than 15% so far this year.
Geopolitical tensions, particularly in the Middle East, have also fueled gold’s rise. Israeli airstrikes on Gaza, which have resulted in over 400 casualties, have put a two-month ceasefire at risk, further driving investors toward gold as a safe haven.
On the economic front, U.S. Industrial Production showed a positive increase in February, rising by 0.7% month-on-month, surpassing the 0.2% forecast. However, housing data was mixed: Building Permits declined by 1.2%, while Housing Starts saw a sharp rise of 11.2%.
Market expectations, as per the CME Group’s FedWatch Tool, suggest the Federal Reserve will maintain interest rates at their current levels when they meet on Wednesday. However, traders anticipate a 66% chance of a rate cut by June.
Meanwhile, gold’s upward momentum is supported by falling U.S. Treasury yields and a weaker U.S. Dollar. The yield on the U.S. 10-year Treasury note dropped to 4.183%, while the U.S. Dollar Index (DXY) decreased by 0.17% to 103.23.
Market Movers: Gold Poised to Extend Rally as Real Yields Decline
U.S. real yields, as measured by the 10-year Treasury Inflation-Protected Securities (TIPS) yield, fell by 1.5 basis points to 1.985%. This drop, which correlates inversely with gold prices, is contributing to the metal’s continued rally.
The U.S. Industrial Production data showed an increase of 0.7% in February, driven by strong motor vehicle production. In contrast, building permits saw a slight decline, while housing starts rose significantly.
Markets are pricing in an expected easing of U.S. interest rates in 2025, with the money market anticipating a 61-basis point reduction. This has led to a drop in U.S. Treasury yields and further pressure on the U.S. Dollar.
Technical Outlook: Gold Price Poised to Continue Climbing
Gold prices are showing an upward bias and could test higher levels beyond the current year-to-date high of $3,038. Should gold surpass this level, it may target $3,050 and even $3,100. Although the Relative Strength Index (RSI) is in overbought territory, the strength of the current trend suggests gold could continue to rise.
On the downside, should gold dip below $3,000, the first support level would be around $2,954, followed by $2,900.
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