Gold (XAU/USD) rises steadily above $2,725 to more than a two-month high, supported by rising fears over the trade war between the US and others after US President Donald Trump’s tariff remarks, in which Trump threatens tariffs on Canada, Mexico, and China. This boosts demand for safe-haven assets. Bets on possible Federal Reserve rate cuts further drive gold’s upward momentum, and a modest US Dollar recovery with a positive risk tone in the equity markets capped additional gains. Technical indicators have gold’s way still going up towards $2,735 and $2,746. Any pullback may, however, find support around $2,700 to keep the bullish sentiment in place.

KEY LOOKOUTS

• Technical analysis points to further upside, with key resistance levels at $2,735 and $2,746 in focus.

• Trump’s tariff threats on Canada, Mexico, and China boost safe-haven demand, keeping gold prices elevated above $2,720.

• Declining bond yields and expectations of two Fed rate cuts in 2025 underpin gold’s bullish momentum.

• Any pullback may find strong support at $2,700, with further downside risks limited near $2,660-$2,635 zones.

Prices for the precious metal gold (XAU/USD) remain high as trade war anxiety and expectation of rate cuts from the US Federal Reserve spur upward momentum. Tariff threats made by US President Donald Trump to Canada, Mexico, and China have upped demand for safe-haven assets, thus forcing gold into its two-month peak above $2,725. Falling yields for US Treasuries and growing inflation worries fuel the surge. Technical analysis indicates that there are potential gains towards resistance levels at $2,735 and $2,746. Pullbacks might find solid support near $2,700. The fundamental outlook is still tilted in favor of the gold bulls, even though a modest US Dollar recovery and a positive risk tone in equities have been reported.

Gold prices (XAU/USD) surge past $2,725 amid trade war fears and Fed rate cut expectations. Safe-haven demand drives bullish momentum, with resistance at $2,735-$2,746 and strong support near $2,700.

• XAU/USD surpasses $2,725, driven by escalating trade war fears and safe-haven demand.

• Threats of tariffs on Canada, Mexico, and China increase market uncertainty, boosting gold prices.

• Declining US bond yields signal possible rate cuts, supporting the non-yielding yellow metal.

• The key resistance lies at $2,735 and $2,746, which may test the October 2024 highs near $2,790.

• Pullbacks are likely to find strong support at $2,700, with further downside limited near $2,660-$2,635.

• A slight rebound in the USD caps gold’s gains, but overall sentiment favors bullish momentum.

• Ceasefire deals and hopes for geopolitical de-escalation limit aggressive bullish bets despite gold’s favorable outlook.

The prices of gold have risen above $2,725, the two-month high, amid increasing trade war fears and rising safe-haven demand. US President Donald Trump’s threat of tariffs on Canada, Mexico, and China has jolted the markets, pushing investors towards gold as a safe asset. The expectation of rate cuts by the Federal Reserve following a drop in US Treasury yields has also helped boost the bullish momentum of the yellow metal. Despite a weak recovery in the US Dollar, the fundamental rationale remains positive for gold, given that traders and investors are factoring in inflation risks due to protectionist policies.

XAU/USD Daily Price Chart.

Source: TradingView, Prepared By ELLYANA

From a technical perspective, gold prices now trade firmly above the $2,720 resistance zone, signaling potential for further gains. Key resistance levels lie at $2,735 and $2,746, where a challenge to the October 2024 peak at $2,790 may be made. Any correction down is expected to find support strong at $2,700, with any deeper decline capped near $2,660-$2,635. Geopolitical news flow – ceasefire deals and trade negotiations – may ease the bullishness but the overall trend remains in favor of gold.

TECHNICAL ANALYSIS

In a technical analysis context, gold prices (XAU/USD) have broken out above the resistance zone of $2,720, which seems to be opening up the channel for further bull runs. On the daily chart, oscillators are picking up positive momentum while still below the overbought levels, providing further upside scope. First resistance is expected at $2,735 followed by the zone of $2,746-$2,748 with possible extensions towards the peak of October 2024, at $2,790. On the negative side, $2,700 remains a good support level, while further supports at $2,660-$2,635 match the 100-day EMA and an ascending trendline from the November low. This technical configuration indicates that the least action path for gold continues to be on the upside.

FORECAST

Gold prices (XAU/USD) are expected to continue with its bullish drive and immediate resistance remains at $2,735, while a further zone at $2,746-$2,748 would act as resistance. A sustained break above these levels could set up a retest of the October 2024 peak near $2,790. Safe-haven demand due to geopolitical uncertainties and trade war fears, as well as expectations of Federal Reserve rate cuts, which lowers bond yields and makes gold more attractive, underpin the overall bullish outlook. Positive technical factors include strengthening oscillators and a strong support base above $2,700. This increases the chances of further upward movement.

Even with the bullish momentum, downside risks are not to be ruled out. A modest recovery in the US Dollar and a generally positive tone in equity markets could limit gold’s gains. Any corrective pullback is expected to find strong support at $2,700, a key psychological level. A deeper drop may find support at $2,660-$2,635, the 100-day EMA and an important ascending trendline. A break below that area could spur additional declines toward $2,622-$2,618. Still, the macro and technical setup leaves little room for downside risks to be a dominant factor, so the overall trend is still on the side of bulls.