Gold prices (XAU/USD) found support around $3,116 during the first half of the European session, following a pullback from a record high set earlier on Thursday. The precious metal’s price action reflects growing concerns over global trade tensions and their potential economic impact, particularly in light of U.S. President Donald Trump’s recent tariff announcements. These developments have created a risk-off sentiment across global financial markets, providing a boost to gold, traditionally seen as a safe-haven asset.
Concerns have intensified following Trump’s decision to impose a 10% baseline tariff on all imports, along with increased duties on several key trading partners. This move has raised fears of a broader trade war, which could disrupt global free trade and damage the world economy. In response, China’s Commerce Ministry vowed to take countermeasures to protect its interests, further escalating the situation.
As trade tensions escalate, expectations have grown that the U.S. economy may face a slowdown due to the tariffs. This has sparked speculation that the Federal Reserve (Fed) could resume its rate-cutting cycle, which has contributed to a sharp decline in U.S. Treasury bond yields. The resulting weakness in the U.S. Dollar (USD) has pushed gold prices to new highs, as investors seek the safety of non-yielding assets.
With the USD weakening and bond yields falling, the downside for gold appears limited for now. However, market participants are advised to wait for a significant pullback or further signs of selling before confirming that the rally in gold has peaked. In the near term, traders will be looking to U.S. macroeconomic data, including Thursday’s jobless claims report, for fresh market cues.
Market Movers: Tariff Concerns Drive Gold Higher
U.S. President Trump’s tariff actions have sent shockwaves through global markets, triggering concerns over potential repercussions for global economic stability. The tariffs, particularly the 10% baseline duty on all imports, have prompted a strong response from China, which has vowed to take necessary countermeasures.
These developments have led to a risk-off mood in financial markets, with investors flocking to safe-haven assets like gold. The demand for gold was further fueled by a sharp decline in the U.S. Dollar, which was undermined by lower U.S. Treasury yields.
Market participants are increasingly concerned that Trump’s protectionist policies could push the U.S. economy into recession, which has fueled speculation that the Fed may cut interest rates as soon as June. The prospect of lower borrowing costs has weighed on the USD, providing additional support to gold prices, which hit a new record high on Thursday.
U.S. Economic Data: Job Growth Not Enough to Offset Tariff Concerns
Despite a stronger-than-expected report on private-sector job growth in March, the USD has remained under pressure. The ADP National Employment Report showed that the U.S. economy added 155,000 jobs last month, well above the expected 105,000 and the revised figure of 84,000 in February. However, concerns over the long-term economic impact of Trump’s tariffs have overshadowed the positive employment data.
Traders are now focused on upcoming U.S. economic reports, including weekly jobless claims and the ISM Services PMI, which may offer additional insights into the health of the economy. These reports, combined with ongoing trade developments, could influence the USD and provide further momentum for gold prices, especially ahead of the U.S. Nonfarm Payrolls (NFP) report on Friday.
Gold Price Outlook: Bullish Trend Remains Intact Above $3,100
From a technical standpoint, the Relative Strength Index (RSI) on the daily chart is signaling overbought conditions, which could limit further gains in gold in the near term. Traders may need to wait for a period of consolidation or a modest pullback before positioning for an extension of gold’s multi-month uptrend.
Despite the short-term caution, the broader trend remains bullish, with the path of least resistance still pointing upward for gold prices. A corrective move below the Asian session low near $3,123 could provide a buying opportunity, with the $3,100 level acting as a key support area. A sustained break below $3,100, however, could lead to further downside, with potential targets around $3,076, the weekly swing low, and the $3,057-$3,058 region, followed by the $3,036-$3,035 zone and the psychological $3,000 mark.
Overall, gold remains poised to benefit from ongoing uncertainties in global trade and economic policy, with its bullish outlook contingent on the preservation of key technical support levels.