Gold prices (XAU/USD) remain close to record highs on Friday, continuing their upward momentum for a second consecutive week. Investors are concerned about the potential economic fallout from U.S. President Donald Trump’s aggressive trade policies, while expectations of multiple interest rate cuts by the Federal Reserve in 2025 are providing support for the precious metal.
Despite positive risk sentiment from U.S.-Canada trade talks and the avoidance of a U.S. government shutdown, a recovery in the U.S. Dollar has capped gold’s upside potential. However, the fundamental backdrop remains bullish, with gold benefiting from rising concerns over global trade and the prospect of easing monetary policy.
Gold Supported by Escalating Trade Concerns and Fed Expectations
President Trump’s aggressive trade actions, including the imposition of tariffs on European goods and steel imports, have fueled fears of a deeper trade conflict, boosting gold as a safe-haven asset. Additionally, recent U.S. inflation data, showing softer-than-expected consumer and producer price growth, has increased expectations that the Fed will lower interest rates to support the economy.
The possibility of three 25-basis-point rate cuts later this year has bolstered gold prices, but a stronger U.S. Dollar and easing global risk concerns have limited further gains.
Looking Ahead: Key Data and FOMC Meeting in Focus
Traders are watching for the upcoming U.S. economic data and the FOMC meeting next week for potential market-moving events. These developments could determine gold’s next direction.
Conclusion
Gold continues to benefit from rising trade tensions and the possibility of rate cuts, although a stronger U.S. Dollar and easing global risk sentiment are limiting its upside. The technical outlook remains positive, with the metal poised for further gains, although a short-term pullback is possible. Gold bulls should watch key support levels for buying opportunities.