Key Points:
- Gold (XAUUSD) surpasses $3,220, maintaining upward momentum.
- Trump’s tariff rhetoric continues to fuel safe-haven demand.
- Fed rate cuts may drive further support for gold.
- Market pricing suggests rate cuts by year-end, supporting gold’s rally.
Gold Continues Upward, Surpassing $3,220
Gold has continued its ascent, surpassing the $3,220 mark, as uncertainty surrounding President Trump’s tariff plans stokes continued safe-haven demand.
Gold’s safe-haven status has been underlined this week, as the U.S. President’s tariff policies created market uncertainty, pushing traders to seek refuge in gold.
Tariff Uncertainty Driving Demand for Gold
The rally in gold comes amid fears of a global recession fueled by Trump’s flip-flopping on his tariff agenda. After initially exempting tech products from reciprocal tariffs, the President has now indicated auto parts may also face tariffs in the coming months. On top of this, new national security investigations into pharmaceuticals and semiconductors have raised the stakes for further tariff measures, adding to market anxiety.
Gold’s strong performance has been partly driven by tariff uncertainty, with markets reeling from the risk of prolonged trade war tensions. As the dollar weakens due to these economic uncertainties, traders are increasingly turning to gold as a safe haven.
Fed Rate Cuts Could Further Boost Gold
The gold rally has also been supported by comments from Fed Governor Waller, who suggested that interest rate cuts may be necessary if tariffs remain in place for the long term. With markets currently pricing in around 86 basis points of rate cuts by the end of the year, this outlook supports gold’s rise, as lower rates typically boost demand for the precious metal.
Lower interest rates make holding gold more attractive compared to interest-bearing assets, as it does not pay interest. Therefore, gold’s attractiveness as a hedge against inflation and economic uncertainty is likely to continue increasing.
Technical Outlook for Gold
Picture: XAUUSD tests resistance at 3225.93 after a steady rally from 3193.69, as seen on the VT Markets app.
XAUUSD (Gold) increased by 0.35%, closing at 3222.45 after opening at 3211.19. The pair saw a steady rise, reaching a high of 3225.93 before retracing slightly to close near 3222.45.
The moving averages (MA 5,10,30) indicate bullish momentum, with the shorter-term moving averages crossing above the longer-term ones. This suggests a potential for continued upward movement. The MACD (12,26,9) confirms this trend, showing a positive histogram as the MACD line (blue) moves above the signal line (yellow).
Key levels to monitor include 3225.93 as immediate resistance. A break above resistance could suggest further upside momentum, while a drop below support could indicate a bearish reversal.
The outlook for gold remains positive as long as tariff uncertainties and expectations for Fed rate cuts persist. With $3,220 acting as a strong support level, any further economic or geopolitical tensions could send gold prices even higher. Traders and market participants will continue to monitor developments in trade talks and monetary policy, both of which will influence the next major move for gold.
