Gold hits record high on fears of US-China trade war and Fed rate cut speculations

• BY Ellyana
• February 5, 2025
• 0 Comments

Gold has reached a fresh all-time high of $2,862 on fears of an intensifying US-China trade war and growing expectations of further cuts in the Federal Reserve’s interest rates. Safe-haven demand continues to remain strong as investors react to China’s retaliatory tariffs against the US and signs of a weakening US labor market. This would further push down the US dollar, further propelling gold upwards, although President Trump’s delay in imposing tariffs on Canada and Mexico does take a bit off the edge from risk. With the breakout above $2,800 despite technical conditions that show overbought, traders still have plenty of room for a higher run-up. Today will be more on US economic releases such as ADP employment and ISM Services PMI while Friday’s NFP report is highly anticipated. KEY LOOKOUTS • Gold reached a high of $2,862 from US-China trade war fears and Federal Reserve rate cut expectations, solidifying high safe haven demand. • Potential Fed rate cuts and weaker US labor market data kept the USD under pressure, resulting in further bullish momentum for XAU/USD. • Uncertainty persisted following China’s retaliatory tariffs on US imports; otherwise, gold prices would have collapsed in the face of Trump’s temporary tariff relief for Canada and Mexico. • Investors will look at US ADP employment data, ISM Services PMI, and Friday’s Nonfarm Payrolls report for the immediate direction of the gold price. Gold has reached a record $2,862 as investors take shelter from increasing US-China trade war tensions and expectations of more Federal Reserve rate cuts. The softening US labor market, as marked by the decline in job openings, has continued to ignite rumors for further monetary relief, pressing down on the US currency and pushing up demand for the non-yielding yellow metal. While risk aversion remained slightly subdued after President Donald Trump delayed tariffs on Canada and Mexico, China’s retaliatory tariffs kept uncertainty elevated in the market. Traders now await key economic reports, including the US ADP employment data and ISM Services PMI, with Friday’s Nonfarm Payrolls report expected to influence gold’s short-term trajectory. Despite the overbought RSI signaling caution, technical support near $2,830 and $2,800 suggests potential buying opportunities, reinforcing the metal’s bullish momentum. Gold prices surged to a record high of $2,862 amid US-China trade war fears and Fed rate cut expectations. Weak US labor market data pressured the USD, boosting gold’s safe-haven appeal. Traders now await key economic reports, with technical support near $2,830 and $2,800 signaling potential buying opportunities. • Gold price hit an all-time peak of $2,862 amid escalating US-China trade war concerns and safe-haven demand. • The USD has come under pressure as the Fed has reduced its expectations on the fed rate cut, coupled with the slowdown in the US labor market. • China’s imposition of tariffs on imports from the US intensified trade tensions, which bolstered demand for gold as an investment against uncertainty. • A brief reprieve of US tariffs on Canada and Mexico eased risk concerns but failed to dent gold’s strong bullish sentiment. • Investors are keeping an eye on the US ADP employment report, ISM Services PMI, and Friday’s Nonfarm Payrolls for market-moving signals. • Overbought RSI calls for caution, but strong support near $2,830 and $2,800 indicates continued buying interest in gold. • The breakout above $2,800 confirms the upward trend of gold, and investors are looking for further gains amid ongoing economic uncertainties. Gold prices have touched fresh all-time highs at $2,862 as investors run to safety amid growing US-China trade war fears and expectations of further Federal Reserve rate cuts. Chinese retaliatory tariffs on US imports have recently heightened their concerns over economic instability in the global economy and are pushing up demand for this yellow metal as a safe haven. Moreover, softer US labor market indicators, such as the job openings, have created an expectation that the Fed might maintain its dovish stance with monetary policy easing. This, in turn, has exerted downward pressure on the US dollar, and therefore gold has further strengthened its bullish trend. Though Trump has offered some relief by temporarily suspending tariffs on Canada and Mexico, this hasn’t dented the appeal of gold in a risk-averse scenario. XAU/USD Daily Price Chart TradingView Prepared by ELLYANA Traders are now closely watching upcoming economic data, including the US ADP employment report and ISM Services PMI, for short-term market direction. However, the focus remains on Friday’s Nonfarm Payrolls (NFP) report, which could influence the Fed’s rate decision and, consequently, gold prices. From a technical perspective, the overbought RSI signals a potential pullback, but strong support near $2,830 and $2,800 suggests buying interest remains intact. The recent break above the $2,800 level further enhances the bullish direction, as traders expect more rise in the coming days due to uncertainty in world markets. TECHNICAL ANALYSIS Gold is now in a firm uptrend as it has taken out the main resistance level at $2,800. As such, its bullish trend remains intact. Meanwhile, the Relative Strength Index is overbought on both the daily and the hourly charts. There is strong support seen close to the areas of $2,830 and $2,800 that could work as a buying zone in case prices fall back. A strong move above $2,862 could open doors for further upsides toward $2,900 whereas breaks below $2,800 might trigger deeper retracement toward the $2,772 support zone. Traders must monitor price action at these important levels and soon-to-be released economic data to confirm the continuation of the trend. FORECAST The robust bullish momentum that gold has must be taken advantage of, given the persistence of geopolitical tensions and economic uncertainty. The US-China trade war rages on while expectations of a further cut by the Federal Reserve in interest rates continue to bolster the yellow metal’s safe-haven appeal. If gold manages to stay above that important $2,800 key support level, then the possibility of breaking through to a level around $2,900 increases. Further upside can also come in due to the softness in the labor market,