Gold prices (XAU/USD) extended their upward momentum for the third consecutive session on Thursday, reaching a two-week high around the $2,942-$2,943 range during Asian trading. The surge is driven by mounting trade tensions and expectations of multiple Federal Reserve interest rate cuts, boosting demand for the safe-haven metal.
Trade Tensions and Economic Slowdown Fears Lift Gold
Investor concerns over a potential economic downturn, exacerbated by U.S. President Donald Trump’s newly imposed tariffs, continue to fuel demand for gold. On Wednesday, Trump implemented a 25% tariff on all steel and aluminum imports and warned of retaliatory measures should the European Union or Canada impose counter-tariffs.
In response, the European Commission announced plans to levy tariffs on $28 billion worth of U.S. goods starting next month, while Canada followed suit with 25% tariffs on over $20 billion in American imports. These developments have intensified fears of a global trade war, prompting investors to shift toward traditional safe-haven assets like gold.
Federal Reserve Rate Cut Expectations Support Gold
Market sentiment was further shaped by weaker-than-expected U.S. inflation data released on Wednesday, reinforcing speculation that the Federal Reserve may cut interest rates three times this year—likely in June, July, and October.
According to the U.S. Bureau of Labor Statistics (BLS), the headline Consumer Price Index (CPI) eased to 2.8% year-over-year in February, down from 3% in the previous month. Meanwhile, core inflation—which excludes volatile food and energy prices—rose 3.1%, marking a slowdown from January’s 3.3% increase.
This cooling inflation, coupled with signs of labor market weakness, has put pressure on the U.S. dollar, which remains near its lowest level since October 16. A weaker dollar typically enhances gold’s appeal, further driving its price higher.
Technical Outlook: Gold Eyes Record Highs
From a technical standpoint, gold’s sustained break above the $2,928-$2,930 resistance zone has strengthened bullish prospects, setting the stage for a potential test of its all-time high at $2,956, last seen on February 24. With technical indicators still showing room for further gains, additional buying pressure could propel prices beyond this level.
Conversely, immediate support lies at the $2,930-$2,928 zone, with a drop below this range potentially accelerating declines toward the $2,912-$2,910 support area. A further break could push gold down to the psychologically significant $2,900 level and, in a more extended sell-off, to late February lows near $2,832-$2,833.
Market Focus on U.S. Producer Price Index (PPI)
Investors will now turn their attention to the upcoming U.S. Producer Price Index (PPI) release for fresh market cues. This data could influence expectations regarding the Fed’s monetary policy and shape short-term trading opportunities in the gold market.
