Gold’s price increased for a third consecutive day, reaching an all-time high of $3,245, with current trading at $3,233. This rise followed heightened trade tensions between the US and China, leading to a weaker US Dollar, which fell to a near three-year low.
China imposed 125% tariffs on US goods in response to tariff hikes by the US. Safe-haven demand for gold increased amid concerns over economic stability affecting prices as US real yields surged to 2.307%.
Consumer Sentiment and Inflation
The University of Michigan Consumer Sentiment Index fell from 57.0 to 50.8, indicating growing pessimism over inflation. Producer Price Index (PPI) data showed a YoY decrease to 2.7%, while core PPI remained above 3% at 3.3%.
Concerns about an impending recession rose, with Goldman Sachs increasing the likelihood of one to 45%. Major banks expressed a similar outlook regarding economic risks.
Technical analysis suggests if gold surpasses $3,245, it could reach $3,250 and potentially $3,300. Conversely, any drop below $3,200 may see support at $3,176, with further support at $3,100.
Gold serves as a hedge against inflation and currency depreciation and is typically inversely related to the US Dollar and Treasuries. Economic and geopolitical factors can drive gold prices, with a weaker Dollar typically supporting price increases.
What this article is highlighting is a sharp upward movement in gold’s price, propelled largely by fear-driven buying and underlying economic strain. Gold has reached yet another peak, surpassing $3,245, before stabilising slightly lower. It’s not just market enthusiasm – there’s a confluence of deeply-rooted anxieties around economic health and global trade stability.
With the US Dollar hitting its lowest point in nearly three years, the rationale becomes quite straightforward. Investors aren’t necessarily flocking to gold because of speculative upside; they’re seeking ground that feels more certain, or at least more detached from crumbling currency conditions. When a currency weakens – particularly one as dominant as the Dollar – it increases the allure of assets priced outside of it. That’s a key force behind the demand right now, and we’re watching that process play out in real time.
Trade Conflicts and Market Sentiments
The fresh tariff impositions between the US and China are not a routine tit-for-tat. They’re layered, they’re sharp, and they shake confidence about where global trade is headed. That has triggered a situation where markets are trying to make sense of what comes next, and safe-haven demand rises not necessarily because there’s something specific to hide from, but because there’s growing uncertainty about everything else.
We’ve noticed consumer sentiment has taken another hit – the Michigan index dropping below 51 points reflects more than just discomfort over prices. It carries an emotional weight. When everyday sentiment suffers, it suggests the public is no longer willing to accept inflation as a temporary nuisance. That lowers spending, tightens financial conditions independently of central banks, and contributes to recessionary pressure.
The PPI numbers show input inflation is losing momentum at the headline level, but staying stubbornly high once the more erratic components are stripped out. When core PPI sits above 3% year-on-year, the message is loud: firms are still dealing with higher internal costs, and those eventually find their way into either final prices or profit compression. That puts policy in a challenging spot — do they act to cool it, or wait it out at the risk of something harder?
Goldman Sachs now sees recession chances nearing 50%. That’s not a throwaway estimate. It reveals cracks in confidence within institutional forecasting. And while numbers by themselves don’t produce panic, when they start piling up, they change behaviour. Liquidity preferences shift. Yield chasers ease off, and defensive assets become more attractive, even with less immediate return.
What matters most for directional traders at this point is momentum versus boundary. As of now, the ceiling at $3,245 has not convincingly broken yet, but it’s within arm’s reach. If flows intensify or the Dollar weakens further, there may be little resistance until the $3,300 handle. That could happen quickly, especially if a sharp leg lower in equities coincides or bond yields adjust downward. But if resistance holds firm, and we see a reversal in either yields or the greenback – particularly through monetary policy commentary – any decline could easily pass through $3,200 to retest the recent support area around $3,176. If selling persists below that, $3,100 comes into focus as a longer-term area of interest.
We consistently observe that gold functions as more than just a political barometer — it’s also hyper-sensitive to real yields. As yields adjust in response to expected growth and inflation fluctuations, gold owners either hedge or hold depending on that signal. Right now, yields are climbing and yet gold is still pushing higher, which points to something deeper — an imbalance in inflation expectations compared to output confidence.
It’s not a condition that fixes itself overnight. Patterns like these tend to be sticky. As such, it may be more constructive to think in terms of trigger points and structural drivers, instead of temporary volatility spikes.
We recommend tracking bond market shifts more tightly in the coming sessions, as these tend to offer early cues for what direction gold might take before the price itself repositions. We’d also place increased weight on overseas developments—particularly from China and Europe—as they’re contributing to dollar weakness, and in turn, to continued upside pressure in commodities.
Finally, it’s worth noting that although gold’s surge might look steep on the surface, it’s backed by both macro data and geopolitical risk. Anyone interacting with price through leverage should monitor volume confirmation closely and avoid assuming that flat data means flat prices.
