Gold prices are trading near record highs above $3,200 early on Friday, continuing their remarkable rally. The precious metal is poised to secure a weekly gain of approximately 5.5%.
Gold’s Record Rally Amid Growing U.S. Economic Concerns
Rising concerns over the U.S. financial stability and economic outlook have driven a wave of selling in the U.S. Dollar (USD), contributing to a further surge in gold prices.
On April 9, U.S. Supreme Court Chief Justice John Roberts reversed a prior ruling, temporarily allowing President Donald Trump’s administration to dismiss members of independent agencies. This ruling has raised the possibility that Trump could remove Federal Reserve Chairman Jerome Powell, heightening fears regarding the stability of the world’s largest economy.
Simultaneously, fears of a U.S. recession are mounting as the trade war with China escalates. These tensions have raised expectations of aggressive interest rate cuts by the Federal Reserve, potentially starting as early as May. The White House confirmed on Thursday that President Trump had raised tariffs on Chinese goods to 145%, prompting China to retaliate with tariffs of 84%. China has also sought to strengthen ties with Europe and Asia to mitigate the impact.
Adding to the U.S. Dollar’s woes, the March Consumer Price Index (CPI) inflation report showed lower-than-expected inflation. While the report didn’t fully capture the effects of the trade war, it revealed that U.S. CPI rose only 0.1% in March, bringing the 12-month inflation rate to 2.4%, down from 2.8% in February. As a result, market participants are increasingly anticipating three to four interest rate cuts by the end of the year.
Looking Ahead: Key Data and Tariff Talks
Upcoming data, including the U.S. Producer Price Index (PPI) and preliminary University of Michigan Inflation Expectations, will be closely monitored. However, these reports may take a backseat to ongoing tariff negotiations. There is also the potential for a U.S. Dollar recovery due to profit-taking and end-of-week repositioning, which could limit the upside for gold prices. Market participants are eagerly awaiting China’s response to the U.S. tariffs.
Gold Price Technical Outlook
The daily chart reveals that the 14-day Relative Strength Index (RSI) is nearing the overbought zone at 70, suggesting that there may still be room for further gains before potential buyer exhaustion.
The immediate resistance for gold is seen at the $3,250 level, and a breakout above this point could open the door for a move toward $3,300. On the downside, the first area of support is at $3,200, with further support at the 21-day Simple Moving Average (SMA) around $3,061. Should the correction deepen, the $3,000 level would be the key line of defense for buyers.