Gold prices continue to hover near record highs, trading just below $3,220 in early European trading on Friday. The ongoing weakness of the US Dollar (USD) and the escalating trade tensions between the United States and China have strengthened the appeal of gold as a safe-haven asset.
US Inflation Data and Trade War Tensions
Recent data from the US Bureau of Labor Statistics (BLS) indicated an unexpected dip in US consumer prices for March. The annual inflation rate eased to 2.4%, down from 2.8% in February, and lower than the market expectation of 2.6%. The core Consumer Price Index (CPI), which excludes volatile food and energy prices, rose 2.8% year-over-year, compared to 3.1% in February, falling short of the consensus estimate of 3.0%.
On a monthly basis, the headline CPI decreased by 0.1%, while the core CPI increased by 0.1%. Despite this softer inflation data, concerns about inflation risks remain, particularly after US President Donald Trump announced a significant escalation in trade tensions with China. Trump raised tariffs on Chinese goods to 125%, effective immediately, following Beijing’s plans to retaliate with 84% tariffs of its own.
These trade developments, combined with uncertainties surrounding the global economy, have kept investors focused on safe-haven assets like gold.
Federal Reserve’s Dovish Outlook
The increasing likelihood of Federal Reserve rate cuts in 2025 has further weighed on the US Dollar, benefiting gold prices. Traders are pricing in expectations for three or possibly four rate cuts this year, which has fueled a stronger demand for gold, priced in USD.
“Gold regains its safe-haven appeal and is on track for new all-time highs,” said Nikos Tzabouras, Senior Market Analyst at Tradu.com.
Technical Analysis: Room for More Upside
The daily chart reveals that the 14-day Relative Strength Index (RSI) is nearing the overbought zone, approaching 70. This suggests there is still potential for further gains before reaching overbought levels.
The immediate resistance is seen at the psychological $3,250 level, with further upside potential toward the $3,300 mark. On the downside, support is initially located at $3,200, followed by the 21-day Simple Moving Average (SMA) at $3,061. Should the price correct further, the $3,000 level will be a critical support point for buyers.
Conclusion
With persistent global uncertainties and a dovish outlook from the Federal Reserve, gold is well-positioned to continue its upward trajectory, with further gains potentially in sight. However, traders will need to monitor key technical levels and any new developments in the ongoing trade war and economic data.
Related topics：
- What is the Value of 18K Gold?
- Why Does Gold Price Increase During War?
- What is the Best Price Being Paid for Gold Sovereigns?
