Gold prices have edged higher recently, with XAU/USD hovering near $2,908. The demand for gold as a safe-haven asset has risen, largely due to increasing concerns about a global trade conflict and economic uncertainty in the U.S. The U.S. dollar index (DXY) is at a four-month low, making gold more attractive to international buyers. According to financial market analyst Kyle Rodda from capital.com, rising risks to economic growth and instability in U.S. foreign policy are adding to gold’s appeal. Rodda predicts that gold could surpass the $3,000 mark in the next few months, given the current economic and geopolitical challenges.
Key Factors Influencing Gold’s Recent Movement
Weaker U.S. Dollar: The dollar’s recent decline has made gold cheaper for overseas buyers, boosting demand for the precious metal.
Tariff-Related Uncertainty: With the U.S. imposing tariffs on various imports, including a 25% duty on goods from Mexico, Canada, and China, gold has become a hedge against fears of inflation and slower economic growth due to these trade tensions.
Inflation Data (CPI and PPI): Investors are eagerly awaiting inflation data (Consumer Price Index and Producer Price Index) to gauge the potential for rate hikes. These reports could influence gold’s price movement, with stronger inflation data possibly pushing gold prices higher.
Despite the recent upward movement, investors remain cautious as upcoming inflation reports and Federal Reserve policy decisions could have a significant impact on gold’s future trajectory.
Trump’s Tariff Policies and Market Uncertainty
Gold’s recent rally has also been fueled by President Trump’s fluctuating tariff policies. In the last few weeks, Trump imposed new 25% tariffs on imports from Mexico, Canada, and China. However, he later exempted some imports from Mexico and Canada for a month, creating confusion in the market.
The uncertainty surrounding these tariff policies has increased fears of inflation and slower economic growth, causing further volatility. Investors are concerned that unpredictable trade policies could destabilize global markets.
Gold’s Role Amid Geopolitical Instability
Amid growing global trade uncertainty and fears of a potential U.S. recession, gold has been seen as a safe-haven asset, protecting against both inflation and economic instability. However, the market remains cautious, awaiting critical CPI and PPI data to determine whether gold will continue its upward trend or face short-term pressure.
Gold Technical Outlook – Symmetrical Triangle Breakout Looms
Technically, gold has been consolidating within a symmetrical triangle pattern around $2,908, with support just above the 50-period Exponential Moving Average (EMA) at $2,908.76. The resistance at $2,913 has capped further price movement, and traders are watching closely for a breakout.
Key Price Levels to Watch
Immediate Resistance: $2,913
Next Resistance: $2,930 (Breakout confirmation)
Higher Target: $2,944 – $2,956
On the downside, if gold fails to hold above the $2,894 support, it could experience a decline towards $2,878 and $2,863, which may encourage a more bearish sentiment.
Conclusion
With U.S. inflation data set to be released this week, the market is in a critical position. A breakout above $2,930 could trigger a bullish rally, with potential targets at $2,944 and higher. On the flip side, a drop below $2,894 could result in more selling pressure, causing gold to retrace towards lower support levels. Traders should closely monitor the direction of the breakout in the symmetrical triangle pattern, as this will likely determine gold’s near-term price action.
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