Gold prices surged to a new all-time high on Thursday, reaching $3,059, fueled by growing concerns over U.S. trade policies under President Donald Trump. The rally was driven by Trump’s recent announcement of a 25% tariff on cars and automotive parts not manufactured in the U.S., reigniting fears of a prolonged trade war. The price of gold (XAU/USD) was trading at $3,051, up more than 1%, as investors sought safe-haven assets in response to heightened uncertainty.
Trade War Tensions Push Gold Prices Higher
The announcement of the new tariffs has intensified concerns among investors, leading to increased buying of gold, which saw its gains extend beyond the $3,050 mark. The U.S. dollar also felt the pressure, with the Dollar Index (DXY) – which tracks the performance of the greenback against six major currencies – falling by 0.33% to 104.31, as risk appetite deteriorated and Wall Street traded lower.
In response, global leaders, including Canada and the European Union, have threatened retaliatory measures, further escalating the tension surrounding U.S. trade policies.
Economic Data and Fed Easing Speculation
Despite the trade turmoil, the U.S. labor market remains resilient. Initial jobless claims for the week ending March 22 rose to 224,000, slightly below expectations, indicating ongoing strength in the job market. Additionally, the U.S. economy showed robust performance with a stronger-than-expected Gross Domestic Product (GDP) growth rate of 2.3% for Q4 2024, up from the previous estimate of 1.9%, though still below the forecasted 2.4%.
Meanwhile, housing data showed signs of improvement, despite confirming a slowdown in the housing market. In the money markets, traders are pricing in 64.5 basis points of Federal Reserve easing in 2025, based on interest rate probabilities from Prime Market Terminal.
Looking ahead, traders are focusing on the upcoming release of the Core Personal Consumption Expenditures (PCE) Price Index, the Fed‘s preferred measure of inflation.
Gold Market Overview: Technical Outlook
Gold’s rally to a new record high of $3,059 came ahead of the release of the PCE inflation data on Friday, fueling optimism that gold could continue its upward trajectory. As the precious metal approaches a potential test of $3,100, the Relative Strength Index (RSI) shows signs of the market becoming overbought, though traders will be monitoring for further aggressive moves, with the extreme RSI level reaching 80.
The next resistance level for XAU/USD is $3,059, and a breakout above this could expose the price to the $3,100 mark. On the downside, support for gold is found at $3,050. A break below this could send prices toward $3,000, followed by the February 24 swing high at $2,956, the $2,900 level, and the 50-day Simple Moving Average (SMA) at $2,887.
As trade tensions continue to rise, the outlook for gold remains bullish, with the potential for further gains as investors seek safe-haven assets amid an uncertain economic and geopolitical landscape.
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