Gold jumped more than 1% as intensifying trade tensions between the U.S., Canada, and China drove demand for the safe-haven asset. U.S. President Donald Trump announced tariffs on imports from these nations, leading to retaliatory actions, including a 25% tariff from Canada and up to 15% levies from China on U.S. agricultural goods. The trade war uncertainty, combined with weakening U.S. Treasury yields at a five-month low, has bolstered the appeal of gold. Technicals are pointing towards more bullish pressure, with the main resistance at $2,917 and possible support at $2,866. Market players are also watching Federal Reserve rate cut expectations, which have climbed to 85.6%, further shaping the path of gold.
KEY LOOKOUTS
• The back-and-forth tariffs among the U.S., Canada, and China are also sparking uncertainty and leading investors towards safe-haven investments such as gold.
• The U.S. 10-year yield registered a five-month low at 4.11%, making gold even more appealing as a bet against economic unrest and inflation.
• With 85.6% chances of a Fed interest rate cut within six months, falling interest rates would further continue gold’s momentum.
• Gold is resisting at $2,917 while support at $2,866 is critical to break in order to avoid another fall in the market.
Gold is gaining further traction as rising trade tensions between the U.S., Canada, and China push investors towards safe-haven. The move by the U.S. to impose retaliatory tariffs, such as Canada’s 25% tariff on American imports and China’s 15% tariffs on agricultural products, has increased market uncertainty. Meanwhile, U.S. Treasury yields fell to a five-month low of 4.11%, enhancing gold’s appeal as a hedge against economic turmoil further. As Federal Reserve rate cut hopes surged to 85.6% by June, decreasing interest rates could be supportive of gold prices further. From a technical standpoint, gold has resistance at $2,917, and support at $2,866 has to remain firm to avoid further downward pressure.
Gold holds up as rising tensions in trade pressure safe-haven demand, while U.S. Treasury yields decline to a five-month low. Expectations for Federal Reserve interest rate cuts also stand at 85.6% and back bullish sentiment further, as central resistance at $2,917 and support at $2,866 will indicate the next move.
• Tariffs imposed by the U.S., Canada, and China continue to fuel the uncertainty in markets and raise the safe-haven demand for gold.
• Gold rose more than 1% and trades at about $2,910 on concerns of trade war and weakening U.S. Treasury yields.
• The U.S. 10-year yield reached a five-month low at 4.11%, contributing to gold’s appeal as an alternative asset.
• Market odds for a Fed rate cut within six months are up to 85.6%, further supporting gold’s bullishness.
• Gold is encountering resistance at $2,917, with the record high of $2,956 the next big level to respect.
• Support at $2,866 is vital to stave off more losses, with further support available at $2,842 in case selling rises.
• Congested price bars signal uncertainty on the part of investors, while safe-haven demand is due to keep gold propped up against further backdrop of geopolitical and economic uncertainty.
Gold continues to be in focus for investors amid rising trade tensions between the U.S., China, and Canada. The announcement by U.S. President Donald Trump to charge tariffs on Chinese and Canadian imports has sparked reprisals with Canada slapping a 25% tariff on American goods and China imposing 15% tariffs on major agriculture products. This back-and-forth trade war has spurred economic volatility, causing safe-haven asset demand to increase, such as gold. With global markets responding to the latest disagreements, investors are keeping an eye on further policy actions and economic reactions from the involved countries.
XAU/USD Daily Price Chart
Chart Source: TradingView
Also, concerns regarding the general economic outlook still shape investor mood. The Federal Reserve is under mounting pressure to reduce interest rates, with market expectations for a rate cut by June reaching 85.6%. Geopolitical news, such as the U.S. temporarily suspending military aid to Ukraine, also contributes to the uncertainty. As inflation worries linger and economic growth continues to slow, the position of gold as a hedge against uncertainty will continue to be strong, rendering it an attractive asset for conservative investors.
TECHNICAL ANALYSIS
Gold continues to exhibit good momentum, building on its recent gains as market uncertainty persists. The price is currently consolidating in a tight band, demonstrating indecision from investors following last week’s volatility. The intraday Pivot Point of $2,879 is acting as the main support, with resistance at $2,917 being the next level to monitor for further upward movement. If the bullish momentum continues, a possible test of the all-time high of $2,956 is still on the cards. On the bearish side, $2,866 is a very important support level, corresponding to earlier lows. A fall below this level may result in additional selling pressure towards $2,842. Investors need to keep a close eye on these levels, as any breakout would determine the direction of the next trend.
FORECAST
The bullish momentum in gold is still intact as global uncertainties push investors towards safe-haven assets. If trade tensions between the U.S., Canada, and China continue to escalate, gold prices may witness a further rally. A breakout above the crucial resistance at $2,917 could drive prices towards the all-time high of $2,956. Moreover, growing hopes for a Federal Reserve rate cut by June can also add to gold’s upside, as lower interest rates make the U.S. dollar weaker and hence gold more desirable. If inflation fears continue along with slowing growth, gold could stay in favor, and upward pressure on prices would persist.
Conversely, any easing of trade tensions or diplomatic breakthroughs can dampen gold’s safe-haven appeal. A rising U.S. dollar, potentially driven by more positive economic readings or lowered expectations for interest-rate cuts, would also serve as a potential damper for gold prices. In the event that selling builds momentum, falling through the significant support at $2,866 might lead to more losses to $2,842. More profound correction can result if sentiment on risk recovers and market players turn attention to equities or other growth-related assets. But unless and until there is material progress towards alleviating economic and geopolitical uncertainty, gold is bound to remain favorably supported.
