GOLD PRICE SURGES TOWARD $2,900 – WILL XAU/USD HIT NEW ALL-TIME HIGHS?
GOLD RALLIES AS TRUMP TARIFFS SPARK SAFE-HAVEN DEMAND
Gold (XAU/USD) is charging higher, now trading above $2,800, as demand for safe-haven assets accelerates. The rally comes amid fresh global trade tensions, with former U.S. President Donald Trump imposing steep tariffs on Canada, Mexico, and China while signaling similar measures against the European Union. Investors are rushing into gold as a hedge against economic uncertainty, inflationary pressures, and potential global market turmoil.
The yellow metal initially dipped toward $2,770 earlier in the session as the U.S. dollar (DXY) spiked to 109.90, driven by Trump’s aggressive trade stance. However, gold quickly rebounded, fueled by the growing risk that tariffs could slow economic growth and prolong the Federal Reserve’s easing cycle. The metal remains near record highs, with technical indicators suggesting that further gains may be imminent if the dollar loses momentum or if global markets see heightened volatility.
TECHNICAL OUTLOOK – GOLD BREAKS KEY RESISTANCE, TARGETS $2,900
Gold is trading near its all-time highs at $2,817.30, with the bullish structure firmly intact. The 20-day EMA at $2,735.70 continues to provide strong support, while the 14-day RSI remains above 60, signaling ongoing bullish momentum. If XAU/USD can hold above the $2,800 psychological barrier, the next upside target sits at $2,900, followed by the highly anticipated $3,000 level.
On the downside, $2,730.50 marks immediate support, aligning with the January 27 low. A break below this level could trigger a pullback toward $2,700, where dip buyers are likely to re-enter. However, with global trade tensions escalating and inflationary fears rising, the path of least resistance remains to the upside.
TRADE WAR FEARS DRIVE GOLD HIGHER – HOW FAR CAN XAU/USD GO?
Trump’s decision to impose 25% tariffs on Canada and Mexico and 10% on China has reignited fears of a global trade war, pushing gold higher. The former U.S. President’s statement that tariffs on European goods are inevitable has only added to investor anxiety. In response, markets are pricing in a potential slowdown in global economic growth, which has traditionally fueled demand for gold.
Gold thrives in periods of economic uncertainty, and the current geopolitical climate is no exception. Investors are flocking to XAU/USD as a safe store of value, particularly as concerns grow over the Federal Reserve’s ability to control inflation while maintaining stable growth. The market is now closely watching how the European Union will respond to Trump’s threats, as any retaliatory measures could further disrupt markets and send gold soaring.
FEDERAL RESERVE RATE POLICY – CAN IT KEEP GOLD UNDER CONTROL?
Despite the ongoing rally, one key factor that could cap gold’s upside is the Federal Reserve’s stance on interest rates. The Fed has maintained rates at 4.25%-4.50%, and while markets expect cuts later this year, strong U.S. economic data could delay easing.
The January Nonfarm Payrolls (NFP) report, ISM Manufacturing PMI, and PCE inflation data are all critical upcoming releases that could impact gold’s trajectory. A strong jobs report or higher-than-expected inflation could lead to a hawkish Fed stance, which may limit further gains in XAU/USD. However, any sign of economic weakness would likely reinforce the bullish case for gold, as traders would anticipate lower rates and a weaker dollar.
CENTRAL BANK BUYING AND INFLATIONARY PRESSURES SUPPORT GOLD
One major tailwind for gold has been strong central bank demand. Countries such as China, India, and Turkey have been aggressively accumulating gold reserves, further supporting prices. Additionally, rising inflation concerns due to trade war-related price hikes are making gold more attractive as a hedge against currency devaluation.
Bank of Montreal analysts have stated that Trump’s tariffs create a strong tailwind for gold, not just because of inflation risks but also due to potential de-dollarization efforts by major economies. If the U.S. continues its aggressive trade stance, more countries may look to reduce their reliance on the dollar, leading to greater demand for gold as an alternative reserve asset.
WILL GOLD BREAK $3,000?
The next major milestone for XAU/USD is $3,000, a level that seemed distant just a few months ago but now appears increasingly realistic given current market dynamics. The strong bullish trend, combined with rising inflation fears, central bank buying, and global trade uncertainty, suggests that gold could continue its ascent.
Key resistance levels to watch include $2,900 in the short term, with a potential parabolic move toward $3,000 if risk sentiment continues to deteriorate. The only real threat to gold’s rally would be an unexpectedly hawkish Fed or a major de-escalation in trade tensions, but at this stage, neither scenario seems imminent.
With the current macroeconomic backdrop, gold remains a strong buy, and dips toward $2,750-$2,770 should be viewed as buying opportunities for those looking to ride the next leg higher. The bulls remain in firm control, and the $3,000 target is now firmly in sight.
