Gold prices decreased slightly on Friday but are set to close the week positively, achieving eight consecutive weeks of gains, reaching an all-time high of $2,954. As of now, XAU/USD is trading at $2,940, down 0.15%.
US President Donald Trump’s tariff policies on various goods have contributed to the rise in gold prices as demand for safe-haven assets increased amid trade policy uncertainties. Meanwhile, progress in the Russia-Ukraine discussions has somewhat alleviated market tensions.
US business activity showed mixed results; while the manufacturing PMI improved, the Services PMI experienced its first decline since January 2023. Additionally, Existing Home Sales dropped, and consumer sentiment worsened according to the University of Michigan data.
Although gold prices remain upwardly biased, potential exhaustion in the trend is indicated by the Relative Strength Index (RSI). Key support levels include $2,900, while resistance levels are found at $2,950 and $3,000.
Gold is an important historical asset, often serving as a store of value and a medium of exchange. Central banks, being the largest holders of gold, diversify their reserves to strengthen their economies and currencies during turbulent periods.
The price of gold often moves inversely with the US Dollar and Treasuries. Factors such as geopolitical instability and lower interest rates typically lead to gold price increases, while market rallies may exert downward pressure.
Overall, various elements influence gold prices, requiring investors to remain aware of market dynamics and conditions.
Even with Friday’s marginal pullback, gold remains on track for its eighth weekly gain, reinforcing its position as a sought-after asset. The peak of $2,954 underlines the strong buying demand, though Friday’s slight dip to $2,940 suggests some traders are taking profits. The trend remains bullish, but signs of hesitation at these levels should not be dismissed too quickly.
Donald’s trade policies have played a role in pushing gold higher, with tariffs triggering uncertainty that drives investors toward safer assets. At the same time, discussions in Eastern Europe appear to have eased some concerns, but not enough to alter gold’s broader trajectory. With safe-haven demand moderating slightly, any further developments in these talks could weigh on the metal or, conversely, reinforce its appeal should tensions escalate again.
Economic data released in the United States has painted a mixed picture. Manufacturing activity showed a rebound, offering some relief, yet the services sector contracted for the first time in well over a year. Housing market numbers also disappointed, with existing home sales falling. Consumer sentiment, as measured by the University of Michigan, deteriorated, reflecting growing worries about inflation and broader economic conditions. These figures, collectively, suggest that uncertainty remains, which historically tends to keep gold well-supported.
Technically, prices continue to lean higher, but momentum may be wavering. The RSI is approaching levels that typically indicate overextension, which means a potential short-term cooldown cannot be ruled out. Should a pullback occur, the $2,900 level stands as the first key support area. On the upside, buyers face resistance close to $2,950, with $3,000 being the next test should bullish momentum persist.
Long-term, gold’s role remains unchanged. Central banks continue to prioritise it when managing reserves, especially when economic conditions appear unstable. They see it as both a hedge and a stabilising factor for their currency holdings. These institutions have been consistently adding to their reserves, highlighting their confidence in gold’s resilience.
Gold continues to react to movements in the US dollar and government bonds. Typically, when the American currency weakens or Treasury yields decline, gold benefits. Geopolitical risks and monetary policy easing also tend to push prices higher, whereas a strong equities rally might divert demand elsewhere. Right now, multiple factors are at play, which makes careful observation of these interconnected elements all the more important in the weeks ahead.
With all these influences in motion, understanding both the immediate technical setup and the broader economic signals will be essential. Gold has had a strong run, but not without potential obstacles ahead. Those engaged in trading need to remain nimble while keeping an eye on both price action and external forces that could shift the current trajectory.
