Gold prices have maintained substantial gains, trading just above the $3,050 level, driven by concerns over US tariffs potentially igniting a global trade war. These fears have increased demand for gold as a safe haven asset.
Additionally, growing expectations for multiple interest rate cuts by the Federal Reserve amid worries about the US economic slowdown have also supported gold prices. Furthermore, ongoing US Dollar depreciation enhances the appeal of gold ahead of the upcoming FOMC meeting minutes.
Impact Of US Tariffs On Gold
The announcement of a 104% tariff on Chinese imports escalated concerns over a trade war, creating risk aversion and heightened gold demand. The CME Group’s FedWatch Tool indicates a 60% probability of a Fed rate cut in May, with expectations of five cuts by 2025.
Despite hawkish comments from Fed officials, the US Dollar has dropped for a second consecutive day. Comments from Chicago Fed President Austan Goolsbee stressed the unforeseen risks posed by tariffs on importers.
Markets await the release of FOMC meeting minutes and upcoming CPI and PPI data, which will influence the US Dollar and gold prices.
Technical Analysis Of Gold Prices
Technically, gold’s recent decline found support near the $2,956 area. A break below this level could prompt bearish movement towards $2,900, while momentum beyond $3,023 might lead to resistance near $3,055-3,056.
Investors will be attentive to the FOMC minutes for insights into policy direction. A bullish tone could strengthen the US Dollar, while a dovish stance could be detrimental. The market’s response may not be immediate, as access to the minutes is restricted until their official release.
With gold trading just above $3,050, its grip has been firm, largely due to worries that trade tensions may ripple wider after the 104% levy on Chinese goods. That sort of policy decision doesn’t just upset bilateral relations—it shakes investor confidence broadly and steers capital into assets like gold, which tend to do better when people worry about political or economic disruptions.
In parallel, the growing belief that the Federal Reserve will need to reduce rates several times in the next year is adding fuel to this rally. The CME FedWatch Tool’s 60% chance of a May cut aligns with what we’ve been seeing: inflation not cooling fast enough to justify holding rates steady, but not spiking wildly either. Five rate cuts by 2025 is not an implausible bet, especially if weaker economic data starts to pour in more consistently.
We saw Goolsbee underline the potential pitfalls of trade measures acting as a new kind of inflation driver. That was more than just a footnote—it has weight, coming from a sitting Fed president. It suggests a degree of sensitivity inside the Federal Reserve to the non-monetary factors now threatening their inflation mandate. While public-facing commentary remains hawkish, the market clearly sees through some of that, particularly as the US Dollar continues to lose ground.
What’s been happening on the technical side reflects this broader shift. The bounce around $2,956 was watched closely—it held, and that level is now looking increasingly pivotal. Breaching it would signal the start of a deeper correction, but price action up to the $3,023 mark and beyond signals the opposite. That resistance band around $3,055–3,056 is the next logical test, but getting there hinges on both the data and how the Fed frames it.
Looking ahead, it is not just about the minutes. Entire pricing structures across options and swaps markets are leaning one way, and there’s a risk that a single paragraph from the Fed could press the reset button. We expect traders to behave defensively in the interim. Not positioning too early, especially before CPI and PPI readings are in, might be the more prudent path. Reactions in the US Dollar, as history shows, can be delayed but decisive.
Navigating this environment calls for constant attention to detail. Rate commentary should be weighed against actual inflation trends, and gold’s path through the chart should be viewed in light of potential macro curveballs. That means adjusting exposure sizing, widening stops slightly during data releases, and pausing to reassess when positioning leans too far ahead of confirmed signals.
