Gold (XAU/USD) reached a peak of $3,004 before falling below $3,000, yet still maintained a weekly increase of over 2.5%. This demand spike followed US President Trump’s announcement of proposed 200% tariffs on European wine and champagne.
Concerns regarding economic growth arose from Trump’s tariff strategy, impacting risk asset demand. US yields also recorded a five-day high before subsequently retreating.
Chinese jewellers saw substantial gains, with Zhejiang Ming Jewelry and Chow Tai Fook both rising. Holdings of bullion are reported to be approximately 20% below their 2020 peak, indicating potential for increased inflows.
Technical analysis suggests caution at the $3,000 level, as profit-taking may ensue if breached. The next resistance points to watch are daily R1 at $3,007 and R2 at $3,026, while support levels include daily Pivot Point at $2,970 and S1 at $2,951.
Interest rate fluctuations greatly affect gold prices and currencies. The Fed funds rate influences market expectations, thereby impacting currency attractiveness and gold valuation.
What we are seeing here is a mix of political and economic forces shaping gold’s short-term direction. The tariffs announced by Trump fueled a spike in demand, although prices couldn’t hold above $3,000. That suggests some hesitation in the market, possibly due to profit-taking or traders questioning whether the rally has more room to run. Still, gold ended the week with a gain of over 2.5%, showing that demand remains strong.
Government policies have a way of shaking up financial markets, and Trump’s tariff proposal is no exception. Such aggressive trade measures can ignite worries about global growth, which often pushes traders towards defensive assets like gold. That appears to have happened here. Meanwhile, US bond yields hit a five-day high before pulling back, indicating that fixed income investors are also adjusting for economic uncertainty. When yields rise, non-yielding gold can look less attractive, but the pullback in yields may have offered gold some breathing space.
China’s jewellery sector responded with enthusiasm, as companies such as Zhejiang Ming Jewelry and Chow Tai Fook saw shares climb. This suggests optimism about future gold demand in the region. At the same time, bullion holdings sit about 20% below their 2020 peak. This could mean more institutional buying ahead if confidence in gold strengthens further.
On the technical side, traders need to keep a close eye on $3,000. It has already shown itself to be an area of interest, drawing buyers and sellers into battle. If prices retreat again, some may choose to take profits, putting downward pressure on gold. The next points of resistance to watch are at $3,007 and $3,026, while key support sits around $2,970 and $2,951. A break below these levels could encourage further selling, at least in the short term.
Interest rates remain a driving force behind gold’s performance. The Fed’s stance on its benchmark rate shapes expectations across financial markets, shifting how traders view both the US dollar and gold. When rates climb, the dollar strengthens, making gold more expensive for overseas buyers. On the other hand, any signals that rates could be cut tend to support gold, as lower yields make it relatively more appealing. Given these factors, monitoring central bank policy remains an essential part of staying ahead of price movements.
