Gold (XAU/USD) consolidates near its all-time high during Asian trading on Friday, supported by investor concerns over US President Donald Trump’s aggressive trade policies and expectations of Federal Reserve interest rate cuts. The metal remains on track for a second consecutive week of gains, despite facing resistance below the $3,000 psychological level.
Gold Gains as Trade Tensions Rise and Rate Cut Bets Strengthen
Safe-haven demand for gold remains strong as Trump escalates trade tensions, threatening a 200% tariff on European wine and cognac unless the EU removes surcharges on US whiskey. This follows his recent 25% tariff on steel and aluminum imports, increasing fears of a prolonged trade war that could weigh on global economic growth.
Meanwhile, expectations for Federal Reserve rate cuts have strengthened after softer US inflation data. The latest Consumer Price Index (CPI) showed a year-over-year increase of 2.8% in February, down from 3% in January, while core inflation eased to 3.1% from 3.3%. Additionally, the Producer Price Index (PPI) remained unchanged for the month, signaling easing inflationary pressure. A cooling US labor market has further fueled speculation that the Fed may lower rates three times this year, with 25-basis-point cuts expected in June, July, and October.
Technical Outlook: Gold Poised for Further Gains Despite Resistance
Gold’s recent breakout above the $2,928–$2,930 resistance zone and its push beyond the previous record high of $2,956 signal bullish momentum. However, the daily Relative Strength Index (RSI) remains near overbought territory, suggesting the potential for a short-term consolidation or pullback before further upside.
Key support lies at $2,956, with a deeper correction possibly testing the $2,930–$2,928 region. A decisive break below this level could trigger additional selling pressure, pushing gold toward the $2,900 mark and potentially as low as $2,880, the weekly low. On the upside, a sustained move above $3,000 could open the door for further gains, extending the metal’s three-month-long uptrend.
Market Focus Turns to US Economic Data and Fed Meeting
Traders are now eyeing the Preliminary Michigan Consumer Sentiment and Inflation Expectations Index for short-term market direction. However, the broader focus remains on the upcoming two-day Federal Open Market Committee (FOMC) meeting starting next Tuesday, which could set the stage for gold’s next major move.
