Daily Price Outlook
Gold prices (XAU/USD) have surged close to record highs, nearing the $3,230 mark in European trading on Friday. This surge is driven by escalating tensions in the US-China trade war and growing expectations of Federal Reserve (Fed) rate cuts, which are fueling a broader risk-off sentiment and bolstering demand for safe-haven assets.
US-China Trade War Intensifies, Boosting Gold
The recent sharp escalation in the US-China trade war has significantly impacted global market sentiment. China has retaliated by imposing a 125% tariff on US goods, an increase from the previous 84%, while the US sharply raised tariffs on Chinese imports, introducing a new 125% levy on top of an existing 20%, making the total tariff burden a striking 145%.
This aggressive stance has increased fears of broader economic repercussions, further driving investors toward the safety of gold.
As a result, the gold has emerged as a primary hedge against this uncertainty, with traders flocking to the precious metal as a store of value. In the meantime, the US dollar has also faced strong sell-offs across the board as traders digest the trade war fallout and its potential impact on economic growth.
Fed Rate Cut Speculation Fuels Gold's Rally
Apart from this, the recent US inflation data has increased expectations that the Federal Reserve might start cutting interest rates soon.
The Consumer Price Index (CPI) for March showed a yearly increase of just 2.4%, which was lower than the expected 2.6% and also less than February’s 2.8%. Similarly, the Core CPI, which excludes food and energy prices, rose by 2.8%, also below forecasts.
These weaker inflation numbers have made markets believe that the Fed could reduce interest rates by as much as one full percentage point before the year ends. Lower interest rates usually mean cheaper borrowing and less support for the US dollar, making it easier for investors to turn to other assets.
As a result, the US Dollar Index (DXY), which compares the dollar to other major currencies, has dropped to around 100.20. This decline in the dollar has helped push gold prices higher, as gold becomes more attractive when the dollar weakens.
At the same time, concerns about both the US and global economic outlooks are leading investors to expect a more dovish approach from the Fed. If the Fed signals rate cuts, non-yielding assets like gold — which don’t offer interest but hold value — become more appealing, encouraging a shift in investment strategies.
China’s Economic Struggles Add to the Mix
China's economic data also paints a bleak picture, with March’s Consumer Price Index (CPI) falling by 0.1%, worse than the expected 0.1% increase.
The country’s Producer Price Index (PPI) contracted by 2.5%, more than anticipated. This slowdown in China’s economy adds to the broader global uncertainty, pushing traders to seek the safety of gold.
Outlook for Gold
Looking ahead, traders will keep a close eye on upcoming US economic data, including the March Producer Price Index (PPI) and preliminary Michigan Consumer Sentiment data. These reports will provide further insight into inflationary pressures and may influence the Fed's decision-making process.
Despite occasional corrections, gold is well-positioned to maintain its bullish trajectory, supported by growing safe-haven demand, expectations of dovish Fed policies, and global economic uncertainties.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) continues to climb, extending its rally to a session high of $3,213.16 before cooling slightly to $3,208.71. Price action is pushing against a significant resistance zone at $3,219, which aligns with a key Fibonacci retracement level.
While momentum remains bullish, traders should be cautious of a short-term pullback as the RSI at 74.14 signals overbought conditions and a potential bearish divergence.
The metal is trading well above its 50-period EMA at $3,065.10, reinforcing the strength of the uptrend. However, a rejection near the $3,219 resistance could trigger a corrective move. The key pivot support sits at $3,160, a level that previously acted as both resistance and now flipped to potential support.
Immediate resistance is marked at $3,219, with higher targets at $3,252 and $3,338 should bullish momentum continue. On the downside, a break below $3,160 could open the door toward $3,124 and further to $3,095.
Given the strong advance, traders may look for a reversal pattern near $3,219 for a potential short entry. A break below the $3,160 pivot would confirm near-term bearish pressure and shift sentiment toward consolidation.
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