Gold prices (XAU/USD) continued their rebound on Tuesday, climbing back above the $3,000 mark as investors sought refuge in the precious metal amid escalating global trade concerns. The commodity found support from persistent fears of an all-out global trade war, which could potentially drag the world economy into a recession, driving renewed demand for safe-haven assets.
The emergence of fresh selling in the US Dollar (USD) further boosted gold, as investors increasingly expect the Federal Reserve (Fed) to resume its rate-cutting cycle in response to the economic risks posed by US President Donald Trump’s aggressive trade policies. This expectation has tempered the recent USD recovery from a multi-month low and provided additional momentum to gold’s rally. However, slight improvements in global risk sentiment may prevent further significant gains for gold.
Investors remain anxious about the potential fallout from Trump’s trade tariffs, with concerns that they could ignite a global trade war and disrupt the world economy. These fears, combined with the recent USD weakness, have fueled safe-haven flows into gold, particularly during the Asian trading session.
The market is now pricing in a potential resumption of rate cuts by the Federal Reserve. Both Fed Governor Adriana Kugler and Chicago Fed President Austan Goolsbee have expressed concerns about the economic impact of the tariffs, with Goolsbee warning of disruptions to supply chains and inflationary pressures. This has only strengthened the outlook for gold, which benefits from lower interest rates and a weaker dollar.
As market participants watch the release of the Federal Reserve’s meeting minutes on Wednesday, along with key US inflation data later in the week, expectations for additional rate cuts are likely to keep pressure on the dollar and support further gains in gold.
Technically, gold could face resistance around the $3,020 mark, but a break above this level may push the metal towards the $3,055-$3,056 range, with the potential to eventually reclaim the $3,100 level. On the downside, key support is seen around $2,957-$2,956, with a further drop potentially extending gold’s recent pullback from its all-time highs.
