Gold prices have continued their steady rise, reaching a new all-time high, surpassing the $2,950 mark during the first half of the European session on Thursday. This surge comes as market concerns over potential trade wars, sparked by US President Donald Trump’s upcoming tariff announcements, drive investors toward the safe-haven asset. Additionally, a decline in US Treasury bond yields is weighing on the US Dollar, further supporting gold’s upward momentum.
The market has also been reacting to hawkish minutes from the Federal Open Market Committee (FOMC) meeting on Wednesday, which indicated that the Federal Reserve is likely to maintain its pause on interest rate changes. While this could limit new buying activity in gold due to its non-yielding nature, the overall market environment remains favorable for gold’s continued ascent, suggesting the metal could extend its two-month-long uptrend.
Trump’s Tariffs and US Dollar Struggles Support Gold’s Rise
The latest rise in gold comes amid growing concerns about the potential impact of Trump’s trade tariffs. The US President announced on Wednesday that he would impose heavy tariffs on various products, potentially escalating global trade tensions and further boosting gold’s appeal as a safe-haven asset. US Commerce Secretary Howard Lutnick also mentioned that Trump’s long-term goal is to abolish the Internal Revenue Service, though Trump hinted that a new trade agreement with China could be in the works.
Despite recent modest gains in the US Dollar, the currency is struggling to maintain its strength, weighed down by falling Treasury bond yields. This additional pressure on the dollar provides further support for gold.
The release of the FOMC meeting minutes on Wednesday highlighted ongoing economic uncertainty, with officials taking a cautious approach toward future interest rate cuts. Fed Vice Chairman Philip Jefferson noted strong US economic performance, a solid labor market, and easing inflation, though inflation remains above the 2% target. Chicago Fed President Austan Goolsbee emphasized that inflation is still too high, and while it has decreased, it will likely take time for rates to come down further. This has failed to generate significant momentum for the USD, which continues to struggle against gold.
US Economic Data and Future Market Drivers
Looking ahead, Thursday’s US economic data, including weekly jobless claims and the Philly Fed Manufacturing Index, could influence the USD and provide further context for gold’s price action. The release of global PMI data on Friday is expected to provide additional insights into the global economic outlook, potentially offering further support for gold’s safe-haven status.
Technical Outlook: Gold’s Uptrend Continues
From a technical perspective, gold’s price action remains strong, with the daily Relative Strength Index (RSI) holding above the 70 mark. While this signals that the market may be nearing overbought conditions, the immediate bias remains bullish, suggesting that gold’s price could continue to rise. A sustained move above the $2,945–2,950 range would signal a breakout from a short-term consolidation phase and pave the way for further upward movement.
On the other hand, any pullback below the immediate support at $2,928 could present a buying opportunity, with additional support near $2,918 and $2,900. If the price breaks below these levels, the next significant support zones are at $2,880 and $2,860–2,855, with the potential for further declines toward $2,815 and $2,800. However, these corrective moves are expected to be short-lived, and gold’s uptrend could resume if these levels hold.
Conclusion
In conclusion, gold prices remain on a strong upward trajectory, supported by a combination of global trade uncertainties, declining US Treasury yields, and a weaker US Dollar. Although the market faces some technical caution due to overbought conditions, the fundamental factors driving gold’s rise suggest that its bullish momentum is likely to persist. With further support from ongoing geopolitical tensions and economic data that may bolster safe-haven demand, gold is positioned to continue climbing, potentially reaching new highs. However, traders should remain mindful of potential pullbacks, which could provide opportunities for further buying as gold’s long-term uptrend remains intact.