Gold prices advanced sharply in early European trading on Thursday, climbing toward the $3,050 level as rising fears of a global trade war and a potential economic slowdown in the United States fueled demand for safe-haven assets.
The rally in gold comes amid mounting concerns that escalating tariffs—particularly the U.S. administration’s newly confirmed 104% duty on Chinese imports—could trigger a worldwide recession. These fears have driven investors to seek refuge in non-yielding assets like gold.
Adding to the metal’s upward momentum, market speculation is growing that a trade-related economic downturn in the U.S. may prompt the Federal Reserve to resume rate cuts. The CME Group’s FedWatch Tool indicates that traders are pricing in more than a 60% probability of a rate cut in May, with as many as five reductions anticipated in 2025.
The U.S. dollar, meanwhile, extended its decline for a second consecutive session, further supporting gold’s rise. Despite hawkish remarks from some Federal Reserve officials, the greenback came under pressure from growing expectations of monetary easing.
Fed Officials Express Tariff Concerns
San Francisco Fed President Mary Daly emphasized earlier this week that while current policy remains modestly restrictive, inflationary risks from broad-based tariffs are becoming more pronounced. Echoing that sentiment, Chicago Fed President Austan Goolsbee warned that the scale of U.S. tariffs has exceeded expectations, posing significant risks to importers and complicating the Fed’s potential policy response to negative supply shocks.
Technical Momentum Favors the Upside
From a technical standpoint, gold’s recent rebound was aided by a strong move beyond the $3,022–$3,023 resistance zone, sparking additional buying interest. The earlier decline from all-time highs found support near the 61.8% Fibonacci retracement level of the February–April uptrend, around $2,957–$2,956—a region that coincides with the multi-week low recorded Monday and is closely aligned with the 50-day simple moving average (SMA), currently near $2,952.
A decisive break below this support zone could open the door to further losses toward $2,920, with a potential test of the $2,900 psychological threshold. However, should the rally continue, resistance is seen near $3,055–$3,056, followed by potential gains toward the $3,075–$3,080 range and a possible retest of the $3,100 mark.
Eyes on Fed Minutes and Key Inflation Data
Investors now turn their attention to the release of the minutes from the Fed’s latest policy meeting, expected later today, for further insight into the central bank’s stance. Market participants will also be closely watching U.S. inflation readings, with the Consumer Price Index (CPI) due Thursday and the Producer Price Index (PPI) on Friday. These data points are expected to shape the Fed’s next moves and will likely influence the short-term trajectory of both the U.S. dollar and gold prices.
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