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Commodities Gold

Gold Glitters at Record Highs as US-China Trade War and Fed Cut Speculation Fuel Rally

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  • April 11, 2025
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Gold prices are climbing near record highs at about $3,220 as tensions in the US-China trade war escalate and speculation of Federal Reserve rate cuts rises to drive demand for the safe-haven metal. The US Dollar remains weakening, and foreign investors find gold increasingly appealing, while softer-than-anticipated US inflation readings have made the case for monetary easing as early as June even stronger. In spite of a brief tariff reprieve for most US trading partners, the sudden spike in tariffs on Chinese imports has increased market uncertainty, further boosting gold’s bullish trend. With technicals signaling further upside, gold may be set to test the $3,250–$3,300 level in the near term. KEY LOOKOUTS • Momentum remains positive as the metal teases lifetime highs. A break above $3,250 on a sustained basis could set the stage for $3,300 and higher. • Weaker US inflation data spurs speculation of Fed rate cuts from June, with markets pricing up to 100 bps of cuts by year-end. • China’s retaliatory duties and the aggressive tariff increase of Chinese products by the US are escalating worldwide economic concerns, fostering safe-haven demand. • The DXY keeps declining, trading close to 100.20, as investors respond to trade volatility and mixed economic signs. Gold prices still fluctuate around historic highs at $3,220 with market sentiment remaining fueled by a combination of economic and geopolitical issues. The increasing US-China trade war, defined by reciprocal tariff increases, has increased worldwide uncertainty, prompting investors to turn towards safe-haven assets such as gold. While simultaneously, gentler-than-anticipated US inflation figures have enhanced hopes of Federal Reserve interest rate cuts beginning as early as June, fueling the rally of the metal even further. The weakening US Dollar, making gold cheaper for international buyers, joins the positive sentiment. With technical indicators still pointing toward upside space, gold may be in line to test the pivotal resistance point at $3,250 and possibly target $3,300 in the near term. Gold prices fluctuate near all-time highs of $3,220, supported by increasing US-China trade tensions and heightened hopes of Fed rate cuts. The weakening US Dollar and safe-haven demand still drive the bullish momentum of the metal. Focus now shifts to the $3,250 resistance level for the next break-out. • Gold prices are trading near all-time highs of $3,220 in the wake of increasing global uncertainty. • The heightening US-China trade conflict has prompted investor flight to safe-haven assets such as gold. • China responded with a 125% duty on US goods following the US imposition of a 145% charge on imports from China. • Weaker US inflation data has reinforced hopes of Federal Reserve interest rate reductions from June. • The US Dollar continues to deteriorate, making gold more desirable to foreign investors. • Policymakers at the Federal Reserve worry about reconciling inflation restraint with a weakening growth in the economy. • Gold is still in high demand as a protection against economic and geopolitical uncertainty. Gold prices are attracting firm investor attention as worldwide economic tensions escalate, led by the deepening US-China trade war. The most recent round of tariff hikes — with the US increasing duties to 145% on Chinese imports and China hitting back with a sharp 125% tariff on US goods — has introduced a new degree of uncertainty into world markets. These trends have renewed fears of dampening global growth and possible dislocations in international trade, causing investors to flock to safe havens such as gold, which historically does well during periods of geopolitical tension. XAU/USD DAILY PRICE CHART CHART SOURCE: TradingView Adding to the allure of gold is the changing economic outlook in the United States. Economic indicators most recently provided were softer than anticipated, solidifying expectations the Federal Reserve could start reducing interest rates as soon as June. The lower rates make assets that don’t pay interest, such as gold, more appealing since the cost opportunity of holding them is reduced. Coupled with a soft US Dollar and general concerns over economic deceleration, these forces are fueling rising demand for gold, making it a sought-after hedge in the uncertain world today. TECHNICAL ANALYSIS Gold is firmly bullish-trending, with the daily chart registering continuous upward momentum. The 14-day Relative Strength Index (RSI) is reaching overbought levels, indicating considerable buying interest yet potentially flashing signs of exhaustion if the rally is not paused. Key levels of support have moved higher, showing strong demand on dips. While near-term resistance is observed around the $3,250 psychological level, a decisive break above this level may spur a new round of buying demand. On the downside, any corrective falls are set to find support around $3,200 and lower still at the 21-day Simple Moving Average (SMA), which means the general trend is still very much in favor of bulls unless the levels are broken convincingly. FORECAST Gold is set to continue its rally in the near term courtesy of a combination of factors such as geopolitical tensions, the weakening US Dollar, and anticipated Federal Reserve rate reductions. If macroeconomic sentiment remains unclear and inflation keeps declining, gold may experience more investment inflows in search of shelter. A break above the psychological $3,250 level can pave the way for more advances, with the $3,300 level seeming like a reasonable medium-term objective. Ongoing safe-haven demand and global risk aversion might maintain pressure on the metal to rise. In spite of the powerful momentum, gold is subject to potential downside risk if any sudden pickup in US-China trade tensions or a better-than-anticipated recovery in US economic data were to occur. This would potentially lift the US Dollar and lower the chances of aggressive Fed rate cuts, both of which could become bearish for gold prices. On the other hand, if the ongoing rally is followed by profit-taking or technical indicators signal signs of being overbought, a short-term correction to $3,200 or even $3,000 cannot be eliminated. But such dips can be interpreted as buying opportunities, provided the overall economic situation remains weak.

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Commodities Gold

Gold Rises to $3,125 as Tariff Uncertainty and Fed Policy Drive Bullion Rally

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  • April 10, 2025
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Gold prices rose above the $3,100 level on Thursday, reaching $3,125 in the US session, on the back of rising global trade tensions and changing interest rate expectations. The rally comes in the wake of President Trump’s declaration of a 90-day tariff reprieve on 56 nations and the EU, and a steep hike in tariffs on Chinese imports, raising concerns about a deepening trade war. In parallel, the People’s Bank of China continues to debase the Yuan, further roiling global markets. In the face of volatile financial markets and diminished expectations of a near-term Fed rate reduction, investors are increasingly seeking the refuge of gold, driving the metal to within shouting distance of its record highs. KEY LOOKOUTS • Gold is testing the R1 resistance level of $3,131, with the record high of $3,167 and the R2 resistance level of $3,180 as key levels to monitor if the rally persists. • On the negative side, the $3,050 Pivot Point and the solid support zone around $3,000—involving the March 14 high and psychological level—are crucial levels that might draw buyers in case prices correct. • The sudden escalation of US-China tariffs and Beijing’s retaliatory actions risk extended trade tensions, which might maintain gold demand at a high level as a hedge. • The CME FedWatch Tool indicates a sharp decline in May rate cut probabilities (to 19.5%), but June still looks probable at 75.3%, which makes future Fed commentary pivotal to gold’s next direction. Investors in gold need to closely monitor important technical and geopolitical events that may determine the metal’s next direction. The $3,131 resistance is being tested, and the all-time high of $3,167 and R2 level at $3,180 are the key upside targets if the bull momentum persists. At the downside, solid support is around the $3,000 level, bolstered by prior highs and the psychological level. Geopolitical tensions continue to be high as the US-China trade war heats up, with retaliatory tariffs and currency fluctuations introducing uncertainty. Also, changing expectations regarding Federal Reserve rate cuts—now less likely in May but still likely in June—are affecting investor attitudes and may have a decisive role to play in gold’s near-term direction. Gold is probing significant resistance levels as it moves above $3,125 on the back of intensifying US-China trade tensions and changing Fed rate cut hopes. The region of solid support lies around $3,000, with coming economic data releases and geo-political developments likely to play a decisive role in determining its next course. • Gold climbed to $3,125, taking out the below-$3,000 barrier with increased market uncertainty. • President Trump imposed a 90-day tariff holiday on 56 countries and the EU, which generated bullish sentiment. • Tariffs on China rose to 125%, provoking concerns about an even more serious US-China trade war and enhancing safe-haven buying. • The Yuan is still weakening, indicating Beijing will use currency depreciation as a bargaining chip. • May fed rate cut probabilities fell to 19.5%, but June cut expectations are still high at 75.3%. • Technical resistance is at $3,131 and $3,167, while $3,000 is a solid support level. • Gold has risen 18% year-to-date, underpinned by central bank purchases and investor demand during financial market uncertainty. Gold is seeing a dramatic rise in demand as economic uncertainty around the world increases, spurred primarily by intensifying trade tensions between the United States and China. President Trump’s declaration of a 90-day tariff suspension on some countries and the European Union provided fleeting relief to markets, but the sudden tariff increase on Chinese imports has renewed fears of an extended trade war. China’s retaliation and depreciation of the Yuan indicate that the conflict could continue to intensify, driving investors into safer assets such as gold. As a historical hedge against geopolitical and economic uncertainty, gold is gaining from the increasing discomfort among global investors. XAU/USD DAILY PRICE CHART CHART SOURCE: TradingView Apart from trade-related concerns, changing expectations regarding U.S. monetary policy are also driving gold’s increasing attractiveness. While the likelihood of a May interest rate cut has dimmed, a potential reduction in June remains probable, indicating the Federal Reserve could still tilt toward loosening if economic conditions deteriorate. In addition, news on China’s stimulus talks continues to fuel overall market volatility. With this backdrop of financial uncertainty and declining confidence in other asset classes, gold is a consistent store of value, drawing the attention of both institutional investors and long-term buyers alike. TECHNICAL ANALYSIS Gold has rallied strongly, unwinding recent declines and moving higher on renewed bullish momentum. The metal is now approaching critical resistance levels, with robust upside momentum indicating ongoing buyer interest. As long as prices stay high, investors are watching closely for a breakout above recent highs to confirm further potential upside. On the other hand, any retracement will find a floor in former consolidation levels, maintaining the general trend in tact as long as gold remains above its key support levels. FORECAST With constant geopolitical tensions, especially between the US and China, and underlying issues of global economic stability, gold will continue to be sought after as a safe-haven asset. Assuming the current trend persists, backed by hopes for future stimulus in leading economies and potential Fed rate cuts in the near months, gold may set new all-time highs. Investors’ increasing demand for riskless assets during stock market turbulence and deteriorating global growth prospects could give gold the spark necessary to move above its historic peak. In a bullish climate, gold has risks on the downside as well. Resolution or attenuation of trade tensions could see investors regain faith in equities and risk assets, diminishing gold’s appeal. Also, if future economic data reveals surprise resilience in the US economy, the Federal Reserve could hold off on rate cuts, which would exert downward pressure on gold prices. Any sudden appreciation of the US dollar or sudden revival in world markets could also trigger profit-taking in gold, causing short-term price corrections.

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