Gold price near record high amid trade war and weaker dollar
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Gold (XAU/USD) continues to trade near its all-time peak, consolidating in a tight range as investors weigh trade war fears, inflation risks, and the Federal Reserve's rate outlook. The metal’s strong performance over the past weeks reflects growing market uncertainty, particularly around U.S. tariffs and global economic stability.
Key Drivers Supporting Gold Prices:
Trade War Uncertainty
Gold remains well-supported as investors assess President Trump’s aggressive tariff policies. New 25% tariffs on steel and aluminum, as well as 10% duties on Chinese imports, have fueled market volatility and weighed on the U.S. dollar, enhancing gold’s appeal as a safe-haven asset.
Weaker U.S. Dollar and Economic Slowdown
Recent U.S. economic data has shown signs of weakness, pushing the dollar to its lowest level since December 10. The S&P Global U.S. Composite PMI fell to 50.4, signaling a slowing economy, while consumer sentiment dropped to its lowest level in 15 months. This weaker outlook increases demand for gold as an alternative store of value.
Inflation Concerns and Federal Reserve Policy
The latest data shows household inflation expectations rising to 4.3%, the highest level since November 2023. While this could further fuel demand for gold as an inflation hedge, hawkish Federal Reserve expectations are limiting further upside. Traders are now awaiting the release of the Personal Consumption Expenditures (PCE) Price Index on Friday, which could shape expectations on Fed rate cuts and drive the next move for XAU/USD.
Technical Outlook: What’s Next for Gold?
Gold is trading near $2,950-$2,955, with resistance at record highs. The Relative Strength Index (RSI) above 70 suggests slightly overbought conditions, potentially limiting immediate gains. However, a breakout above $2,955 could open the door to further gains.
On the downside, key support levels include $2,920-$2,915, followed by $2,900 and $2,880. A break below $2,855 could trigger deeper corrections toward $2,800.
Key Events to Watch This Week:
U.S. PCE Inflation Data (Friday) – A key Fed indicator that could impact the dollar and gold. U.S. Q4 GDP (Thursday) – Economic growth data could influence market sentiment. Durable Goods Orders (Thursday) – A gauge of economic momentum. Fed Speeches – Policymakers’ comments could signal future rate policy. Bottom Line Gold’s bullish momentum remains intact, driven by trade war concerns, inflation fears, and a weakening dollar. However, hawkish Fed expectations could limit upside until clearer signals emerge from upcoming U.S. economic data. Investors should watch $2,950-$2,955 as the key level for potential further gains, while downside risks could increase on a break below $2,900.
Key Drivers Supporting Gold Prices:
Trade War Uncertainty
Gold remains well-supported as investors assess President Trump’s aggressive tariff policies. New 25% tariffs on steel and aluminum, as well as 10% duties on Chinese imports, have fueled market volatility and weighed on the U.S. dollar, enhancing gold’s appeal as a safe-haven asset.
Weaker U.S. Dollar and Economic Slowdown
Recent U.S. economic data has shown signs of weakness, pushing the dollar to its lowest level since December 10. The S&P Global U.S. Composite PMI fell to 50.4, signaling a slowing economy, while consumer sentiment dropped to its lowest level in 15 months. This weaker outlook increases demand for gold as an alternative store of value.
Inflation Concerns and Federal Reserve Policy
The latest data shows household inflation expectations rising to 4.3%, the highest level since November 2023. While this could further fuel demand for gold as an inflation hedge, hawkish Federal Reserve expectations are limiting further upside. Traders are now awaiting the release of the Personal Consumption Expenditures (PCE) Price Index on Friday, which could shape expectations on Fed rate cuts and drive the next move for XAU/USD.
Technical Outlook: What’s Next for Gold?
Gold is trading near $2,950-$2,955, with resistance at record highs. The Relative Strength Index (RSI) above 70 suggests slightly overbought conditions, potentially limiting immediate gains. However, a breakout above $2,955 could open the door to further gains.
On the downside, key support levels include $2,920-$2,915, followed by $2,900 and $2,880. A break below $2,855 could trigger deeper corrections toward $2,800.
Key Events to Watch This Week:
U.S. PCE Inflation Data (Friday) – A key Fed indicator that could impact the dollar and gold. U.S. Q4 GDP (Thursday) – Economic growth data could influence market sentiment. Durable Goods Orders (Thursday) – A gauge of economic momentum. Fed Speeches – Policymakers’ comments could signal future rate policy. Bottom Line Gold’s bullish momentum remains intact, driven by trade war concerns, inflation fears, and a weakening dollar. However, hawkish Fed expectations could limit upside until clearer signals emerge from upcoming U.S. economic data. Investors should watch $2,950-$2,955 as the key level for potential further gains, while downside risks could increase on a break below $2,900.