Gold prices (XAU/USD) continued their upward trend on Thursday, following a strong rally the previous day. The precious metal’s gains are being driven by ongoing concerns over US-China trade tensions, despite a temporary optimism sparked by US President Trump’s decision to pause tariffs on most nations. Inflationary fears also continue to support gold’s role as a hedge against rising prices.
The US Dollar (USD) is struggling to capitalize on its recent bounce from a weekly low, as traders maintain expectations of multiple interest rate cuts by the Federal Reserve (Fed) in 2025. This scenario provides additional support for gold, which does not offer any yield. However, a potential improvement in global risk sentiment and rising US Treasury yields could limit gold’s gains. Traders are also closely monitoring the release of US consumer inflation data later on Thursday for further direction.
US-China Trade Tensions Keep Gold Supported
In an unexpected move, US President Trump announced a 90-day pause on new tariffs, just a day after they were imposed. However, he raised tariffs on Chinese goods to 125%, in response to China’s own tariff increase on US imports. The escalating trade tensions have sparked fears of inflation and slower global growth, boosting demand for gold. This led to a more than 2% jump in gold prices on Wednesday, marking the best day for the metal since October 2023.
Traders have adjusted their expectations for the Fed’s rate cuts. Following the release of the March FOMC meeting minutes, which revealed that officials were concerned about higher inflation, traders now expect a slower pace of rate cuts. This change in outlook has provided little relief to the US Dollar, further supporting gold prices.
Focus on US Inflation Data
The market is awaiting the release of the US consumer inflation data later on Thursday, followed by the Producer Price Index (PPI) report on Friday. These figures will offer insights into inflation trends and could influence the Fed’s approach to rate cuts. The results will be crucial in determining the near-term outlook for both gold and the US Dollar.
Gold Price Technical Outlook
Technically, gold has shown resilience below the 200-period Simple Moving Average (SMA) earlier this week, and its subsequent upward movement suggests further bullish potential. Positive indicators on the daily chart suggest that gold could retest its all-time high of $3,167-3,168, which was reached earlier this month.
On the other hand, if gold falls below the $3,100 level, support may be found around the $3,065-3,060 range. A break below this level could accelerate losses, with the psychological $3,000 level acting as the next key support. This zone coincides with the 200-period SMA on the 4-hour chart, and a break below this could shift the short-term bias in favor of bearish traders.
Conclusion
Gold prices remain well-supported amid ongoing US-China trade tensions and expectations of slower interest rate hikes from the Federal Reserve. With key economic data on the horizon, including inflation reports, gold’s safe-haven appeal is likely to continue driving its price higher. Investors will closely watch these developments for further guidance on the precious metal’s near-term direction.