Gold (XAU/USD) surged to a new record high above $3,000 on Friday after a bearish start to the week. The shift came as markets turned their focus from politics to the Federal Reserve’s upcoming policy decisions.
Gold Rebounds on Trade Fears and US Dollar Weakness
Gold started the week under bearish pressure, but global trade concerns and a slowdown in the US economy fueled safe-haven demand, helping gold recover from below $2,900. US President Donald Trump’s trade policy decisions sparked volatility, with the announcement of new tariffs on steel and aluminum imports from Canada. This prompted retaliatory measures and fears of a global trade war, which boosted gold’s demand.
Meanwhile, US inflation data showed a slight softening in annual CPI, but it did not significantly affect market sentiment. Gold continued to rise, surpassing $2,900 and breaking the previous record high of $2,956, fueled by growing safe-haven interest and speculation about China’s potential monetary easing.
Focus Shifts to the Federal Reserve’s Policy and Economic Outlook
The Federal Reserve’s monetary policy decisions are now in focus, with markets expecting no rate cuts in March. Investors will scrutinize the Fed’s updated economic projections and Chairman Jerome Powell’s comments, as any changes to the interest rate outlook could significantly impact the US dollar and, in turn, gold prices. A shift in growth or inflation forecasts could either support or pressure the USD and influence gold’s direction.
Gold Technical Outlook
Gold remains in an upward trend, with technical indicators supporting further gains. If it holds above $3,000, the next target could be $3,060, followed by $3,100. However, a failure to hold above $3,000 could result in a pullback to support levels around $2,920 and $2,900.
Conclusion
Gold’s rally is driven by global uncertainty, trade tensions, and a weakening US dollar. With the Fed’s upcoming decisions set to play a critical role, gold’s trajectory will depend on any shifts in interest rate expectations and inflation forecasts. Investors will be closely watching for signals that could shape the precious metal’s future direction.