Gold rose for eight weeks running, reaching an all-time peak of $2,954 amidst uncertainty caused by widened U.S. tariffs imposed on lumber and soft commodities that further fueled market jitters. Whereas safe-haven buying drove bullion up against the backdrop of Trump’s strong trade rhetoric, conflicting U.S. economic readings—characterized by a positive Manufacturing PMI but a collapsed Services PMI, declining existing home sales, and softening consumer sentiment—kept investors tentative. Technical indicators indicate while gold’s upward bias is still intact, the possibility of retracement exists if there is a breach of major support levels around $2,900, all against the backdrop of expected monetary easing in 2025 by the Fed.

KEY LOOKOUTS

• Trump’s widening tariffs on lumber and soft commodities power market anxieties, driving safe-haven purchases, but pose downside risks in the context of global trade tensions.

• While production improves, falling services PMI, decreasing home sales, and weaker consumer sentiment signal increasing caution.

• Gold’s strength falters; an RSI exit from overbought levels and support at $2,900 could trigger a corrective pullback.

• Central bank buying rose by more than 54% YoY, supporting bullishness in the face of trade uncertainty, while the Fed’s expected easing in 2025 is a long-term tailwind.

Investors closely follow the deepening trade policy uncertainty as Trump’s soft commodities and lumber tariffs continue to stimulate market anxiety and safe-haven purchases. Meanwhile, diverging U.S. economic indicators come with rising manufacturing activity paired against contracting services PMI, softer home sales, and a cooling consumer mood to provide even greater caution. Technical indicators indicate that gold’s rally could be running out of steam, as the RSI leaves overbought levels and support at $2,900 is key. In addition, central bank buying jumped more than 54% YoY, and hopes for a 50 basis point Fed easing in 2025 provide additional bullish backing.

Investors are paying close attention to Trump’s wider tariffs, which have sent gold prices to near historic highs due to safe-haven demand. Cautiousness may be appropriate based on mixed U.S. data and weakening technical momentum, with important support at $2,900.

• Gold reached a new high of $2,954 following eight weeks of continuous increases.

• Trump’s imposition of wider tariffs on lumber and soft commodities created market uncertainty.

• American economic news recorded a higher Manufacturing PMI but a downgrading Services PMI.

• Sinking current home sales and consumer attitudes deepened investors’ hesitations.

• Indications in the technical arena show the market potentially reeling, with prime support around $2,900.

• Central bank purchases surged more than 54% YoY, sustaining bull-like expectations.

• Fed funds futures project that the next rate reduction will be a 50 basis point drop sometime in 2025.

Gold has risen for eight straight weeks to a record $2,954 as policy uncertainty in global trade has been building. The announcement by President Trump to target tariffs on lumber and soft goods added to uncertainty in the markets, with investors turning to gold as a haven asset. Geopolitical anxiety underpinning the trend further involves ongoing diplomatic talks to calm the Russia-Ukraine conflict that has kept markets around the globe in a watchful mood.

XAU/USD Daily Price Chart

TradingView Prepared by ELLYANA

Conversely, US economic data has a mixed report. Although there has been some resilience in manufacturing activity, softer services sector performance and weakening consumer sentiment indicate underlying economic issues. Moreover, the rise in central bank gold purchases indicates expanding optimism in the metal as a store of value. Investors continue to monitor further policy action, especially with hopes for a possible loosening by the Federal Reserve during 2025.

TECHNICAL ANALYSIS

Technical analysis shows that although gold still has an upward bias, momentum seems to be waning since the Relative Strength Index leaves overbought conditions. Critical support is set near $2,900, and a violation of this level can open the doors for a drop towards prior swing lows. Alternatively, if the price succeeds in breaking through resistance near $2,950, it might reflect further upwards progress towards the $3,000 level.

FORECAST

If gold can break through important resistance levels—particularly around the psychological level of $2,950—then further bullish pressure could push prices to the $3,000 level. Positive global trade trends and ongoing central bank demand for gold could further support investor attitudes, leading to a prolonged rally and cementing the metal’s position as a safe haven.

On the other hand, if gold fails to break through these resistance points or if newly released economic data indicates improved risk sentiment, a retracement back to the support level of $2,900 will be seen. A change in market fundamentals, perhaps an enhanced understanding of trade policies or good economic recovery indicators, would result in profit-taking and cause prices to pull back temporarily.