Gold (XAU/USD) extended its winning streak for the third consecutive day on Thursday, reaching a two-week high of around $2,942–$2,943 during the Asian session. The rally is fueled by escalating trade tensions and concerns over an economic slowdown triggered by US President Donald Trump’s new tariffs. Additionally, growing expectations of multiple Federal Reserve interest rate cuts this year continue to support the precious metal.
Trade Tensions and Economic Fears Bolster Gold
Gold’s safe-haven appeal remains strong as investors react to Trump’s aggressive trade policies. The 25% tariffs on steel and aluminum imports took effect on Wednesday, with Trump warning of retaliation if the European Union and Canada impose countermeasures. In response, the EU announced tariffs on $28 billion worth of US goods starting next month, while Canada imposed 25% tariffs on over $20 billion of US exports.
The market is also digesting signs of a cooling US economy, with softer-than-expected consumer inflation data released on Wednesday. The Consumer Price Index (CPI) eased to 2.8% year-over-year in February, down from 3% in January. Core inflation, excluding food and energy, slowed to 3.1% from 3.3%. This, along with labor market weakness, has reinforced speculation that the Federal Reserve may begin cutting interest rates as early as June, with additional reductions likely in July and October.
Weaker Dollar Lifts Gold Prices
The US dollar remains under pressure, hovering near its lowest level since October 16, further strengthening gold’s bullish momentum. Investors now await the release of the US Producer Price Index (PPI) for additional cues on inflation trends and potential short-term trading opportunities in the North American session.
Technical Outlook: Bulls Eye Record Highs
From a technical standpoint, gold’s break above the $2,928–$2,930 resistance zone has set the stage for a potential test of its all-time high near $2,956, last reached on February 24. Daily chart indicators remain firmly in bullish territory, with no immediate signs of overbought conditions, suggesting further upside potential.
On the downside, immediate support lies around the $2,930–$2,928 range. A drop below this level could accelerate a decline toward $2,912–$2,910, with further losses potentially extending to $2,900. A decisive break below $2,860 could open the door for a deeper correction, bringing prices down toward the late February lows of $2,833–$2,832, with the $2,800 mark acting as a critical psychological support level.
Outlook: Gold’s Rally Set to Continue
With ongoing trade tensions, a weakening dollar, and rising expectations of Federal Reserve rate cuts, gold remains well-positioned for further gains. Barring a shift in risk sentiment, the yellow metal could challenge its all-time high in the near term.
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