Gold prices (XAU/USD) extended their steady upward trajectory during the early European session on Monday, hitting a new all-time high as investors focused on escalating trade tensions. With bulls now setting their sights on the $2,900 mark, the precious metal has benefitted from concerns surrounding a potential global trade war, spurred by U.S. President Donald Trump’s announcement of new tariffs on steel and aluminum imports.
Trump’s plans to impose a 25% tariff on all steel and aluminum imports into the U.S. have exacerbated fears of a global trade conflict. Coupled with heightened U.S.-China tensions, the prospect of a trade war has prompted investors to turn to gold as a safe-haven asset. The threat of escalating trade disputes has contributed to a rising sense of economic uncertainty, which has been a key driver of gold’s recent rally.
The announcement of new tariffs by Trump has also stoked concerns that protectionist policies could reignite inflation in the U.S., further bolstering gold’s appeal as a hedge against rising prices. Despite a modest uptick in the U.S. dollar (USD) strength, which typically dampens demand for dollar-denominated commodities like gold, the precious metal has continued its ascent, unaffected by this factor. However, speculation that a resilient U.S. labor market and inflation concerns could limit the Federal Reserve’s ability to cut interest rates further may cap gold’s potential gains.
Trump’s Tariff Threats Fuel Safe-Haven Flows into Gold
Gold prices found additional support from Trump’s latest tariff proposal, which he revealed on Sunday. The new tariffs are set to target all steel and aluminum imports into the U.S., with Trump also pledging to introduce reciprocal tariffs on other nations, further stoking concerns about global trade tensions. The announcement came at the start of the week, giving a strong boost to the safe-haven gold market.
Meanwhile, geopolitical concerns have also added to the gold price’s rally. Russian Deputy Foreign Minister Galuzin recently stated that there are no satisfactory proposals to start talks regarding Ukraine, contributing to a sense of global instability. In the U.S., Vice President JD Vance is reportedly traveling to Germany this week to present details of a new U.S. proposal, although the specific terms of this proposal remain unclear.
Despite the strong upward movement in gold, some analysts remain cautious. Investors are worried that Trump’s protectionist policies could increase inflationary pressures in the U.S., which may limit the Federal Reserve’s ability to lower interest rates. The positive U.S. labor market data from Friday’s Nonfarm Payrolls (NFP) report also complicates the outlook. The economy added 143,000 jobs in January, slightly below the anticipated 170,000, but the unemployment rate unexpectedly dropped to 4.0%, signaling strength in the labor market. This strong jobs data, combined with inflation concerns, could limit the Fed’s ability to ease monetary policy further, putting a ceiling on gold’s price appreciation.
Federal Reserve Concerns and Economic Uncertainty Weigh on Gold’s Outlook
The U.S. Federal Reserve’s stance on interest rates is another key factor influencing gold’s trajectory. Minneapolis Fed President Neel Kashkari has indicated that he would support further rate cuts if inflation data remains favorable and the labor market stays strong. Kashkari added that the Fed is in a good position to remain patient until more information on Trump’s economic policies becomes available.
Chicago Fed President Austan Goolsbee, however, expressed concerns about the inconsistency of U.S. government policies, highlighting the economic uncertainty that makes it difficult for policymakers to predict future trends in inflation and overall economic conditions. At the same time, Fed Board of Governors member Adriana Kugler noted that U.S. economic growth remains solid but emphasized that progress toward the 2% inflation target has been slow and uneven.
Despite these mixed signals from the Fed, traders remain focused on gold’s upward momentum, with expectations that geopolitical tensions and inflationary pressures will continue to support the precious metal. However, a modest strengthening of the U.S. dollar could limit aggressive bullish bets on gold in the near term. Traders are now looking ahead to key events such as Fed Chair Jerome Powell’s semi-annual congressional testimony and upcoming U.S. consumer inflation data for further direction.
Technical Outlook for Gold: Consolidation Likely Before Further Gains
From a technical standpoint, the Relative Strength Index (RSI) on gold’s daily chart is showing overbought conditions, suggesting that a period of consolidation or a modest pullback could be on the horizon. While the uptrend remains intact, traders may choose to wait for a near-term correction before positioning for further gains. A potential barrier for gold lies in the $2,886-2,887 region, which marks the previous all-time peak, before gold can attempt to break through the $2,900 level.
On the downside, any pullback toward the immediate support zone near $2,855-2,854 could present a buying opportunity for those looking to enter the market. Further weakness could push gold toward the $2,834 level, with additional support at $2,815-2,814 and the round figure of $2,800.
Overall, gold’s uptrend appears to be uninterrupted, driven by geopolitical uncertainty, inflation fears, and trade-related concerns. However, traders should remain cautious, as technical indicators suggest that a short-term pullback is possible before gold can continue its climb toward new highs.
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?
