Gold prices (XAU/USD) continued to rise during the first half of the European session on Thursday, staying near the record high reached on February 24. The ongoing concerns over the economic impact of US President Donald Trump’s aggressive trade policies have supported gold for three consecutive days. Additionally, expectations that the Federal Reserve will cut interest rates multiple times this year, fueled by fears of a tariff-induced slowdown in the US economy, have further boosted gold’s appeal as a non-yielding asset.
Despite some strength in the US Dollar, which recovered from its lowest level since October 16, gold’s upward momentum remains intact. Investors are now looking ahead to the release of the US Producer Price Index (PPI) for potential short-term opportunities.
Trade Tensions and Economic Concerns Drive Gold Demand
Trump’s 25% tariff on steel and aluminum imports, which took effect on Wednesday, and threats of retaliation against countermeasures from the EU and Canada have intensified concerns over a potential economic slowdown. The European Commission and Canada have announced tariffs on US goods in response, further fueling market uncertainty.
A softer-than-expected US inflation report has led to increased bets on the Federal Reserve cutting rates, with some anticipating three 25-basis-point rate cuts by June, July, and October. Despite a modest recovery in the US Dollar Index, gold’s momentum remains strong due to ongoing concerns about trade tensions and the US economic outlook.
Gold Approaches Record High, Technical Indicators Remain Positive
Technically, gold has moved past the $2,928-2,930 resistance level, setting its sights on the all-time high of $2,956 reached on February 24. Daily chart indicators remain positive, signaling room for further gains. If gold continues its upward trend, the next target could be the record high. On the downside, key support levels are around $2,930-2,828, with further declines potentially testing the $2,800 mark.
Conclusion
Gold prices remain buoyed by ongoing trade tensions and economic concerns, with the metal continuing to attract safe-haven demand. While the US Dollar shows signs of recovery, gold’s upward trend is likely to persist, supported by expectations of Federal Reserve rate cuts and global uncertainty. As traders await key economic data, gold’s appeal as a protective investment is set to keep it on an upward trajectory in the near term.