Gold prices (XAU/USD) have continued their upward momentum, surpassing the $2,900 mark and reaching a fresh daily high during the first half of the European session. This marks a sharp reversal from the previous day’s losses, which saw the price drop to a one-week low. Investors remain concerned about the potential economic fallout from US President Donald Trump’s trade tariffs and persistent geopolitical risks, fueling a global risk-aversion trade that benefits the safe-haven appeal of gold.
US Trade Tariffs and Geopolitical Tensions Drive Demand for Gold
The ongoing trade tensions, particularly President Trump’s 25% tariffs on global steel and aluminum imports, which are set to go into effect on Wednesday, have heightened concerns about a potential US economic slowdown. The Trump administration is also preparing for additional tariffs scheduled for April 2. These developments have raised fears of a possible US recession, with speculation growing that the Federal Reserve (Fed) may be forced to cut interest rates multiple times this year.
As a result, US Treasury bond yields remain subdued, putting further downward pressure on the US Dollar (USD) and contributing to gold’s price recovery. The weaker dollar benefits gold, a non-yielding asset, by making it more attractive to investors in a low-interest-rate environment.
Geopolitical Risks Intensify Gold’s Safe-Haven Appeal
Further exacerbating market uncertainty, Ukrainian President Volodymyr Zelensky’s recent meeting with President Trump ended in disappointment, leading to the suspension of all US military aid to Ukraine. Geopolitical tensions between the US and Russia continue to rise, with concerns about further military confrontations. As a result, investors are increasingly turning to traditional safe-haven assets, like gold, to shield themselves from the escalating global risks.
Notably, Ukraine launched record drone attacks on Moscow ahead of a crucial summit between US and Ukrainian officials, which could further impact investor sentiment and influence gold prices.
Market Focus Shifts to US Inflation Data
As the markets digest these geopolitical developments, traders are looking ahead to critical US economic data this week, particularly the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday. These inflation figures will play a pivotal role in shaping the trajectory of the US Dollar and gold prices in the near term. Additionally, the release of the Job Openings and Labor Turnover Survey (JOLTS) will provide further insight into the health of the US labor market.
Technical Outlook: Resistance and Support Levels
From a technical perspective, the gold price remains poised between key resistance and support levels. To maintain its bullish momentum, gold needs to break past the $2,922-$2,924 range. A sustained move beyond this barrier could propel gold prices to retest the record high of $2,956, which was last reached on February 24.
On the downside, should the price break below the $2,880 level—the previous one-week low—it could signal further bearish pressure, potentially dragging gold towards the $2,860 support area and, subsequently, the $2,833-$2,832 range. A further drop below this could lead to the $2,800 mark.
Conclusion
In conclusion, the gold market is navigating a complex landscape of geopolitical risks, economic concerns, and monetary policy expectations. While gold prices are benefiting from the weakened US dollar and increasing demand for safe-haven assets, traders remain cautious, awaiting key inflation data that will likely dictate the near-term direction for the precious metal. The next few days could prove crucial for gold’s outlook, with resistance at $2,922-$2,924 and support near $2,880 serving as key technical levels to watch.