Gold Price (XAU/USD) Eyes $2,950: Can the Rally Hold?
Gold prices are climbing, with XAU/USD trading at $2,917, up 0.8% for the session and extending gains for a second straight day. The surge comes as safe-haven demand intensifies amid Trump’s tariffs on Mexico, Canada, and China, fueling economic uncertainty. Gold has already gained 10% in 2025, hitting a record high of $2,956 in February. However, key resistance at $2,950 stands in the way of further upside. With traders eyeing upcoming U.S. jobs data and Federal Reserve rate expectations, will gold push toward $3,000, or is a pullback imminent?
Tariffs Fuel Safe-Haven Demand for Gold
The latest wave of U.S. tariffs has triggered uncertainty, sending investors flocking to gold as a hedge. President Trump’s administration implemented a 25% tariff on imports from Mexico and Canada, while also doubling duties on Chinese goods to 20%. China immediately responded, imposing additional 10-15% tariffs on U.S. imports and restricting exports to key U.S. entities.
The escalating trade war has spooked markets, leading to increased demand for gold as a safe-haven asset. Historically, trade conflicts weaken global economic confidence, prompting central banks and investors to hedge risks with gold. The immediate impact has been a sharp rally in XAU/USD, but whether it can sustain momentum depends on the Federal Reserve’s next move.
Fed Rate Expectations: A Catalyst or a Headwind for Gold?
While gold is gaining momentum, Federal Reserve policy remains a crucial factor in determining its next move. The Fed kept rates steady in its last meeting but is widely expected to cut rates in June, with another reduction likely in September. Lower interest rates reduce the opportunity cost of holding gold, typically fueling demand.
Traders are now watching Friday’s U.S. Nonfarm Payrolls (NFP) report, which will provide fresh clues on the Fed’s trajectory. If the jobs data disappoints, it could strengthen the case for rate cuts, pushing gold prices toward $3,000. However, strong payroll figures could keep rates elevated, boosting the dollar and capping gold’s rally.
Gold Market Technical Outlook: Will $2,950 Hold or Break?
Gold’s recent rally has been impressive, with XAU/USD breaking above $2,900 and testing resistance at $2,950. The 50-day EMA sits near $2,800, providing strong support for buyers. A sustained push above $2,950 could trigger further upside, with the next major target at $3,000.
However, a rejection at $2,950 could lead to profit-taking, sending prices back toward $2,877, where gold has seen consolidation. If bearish momentum intensifies, $2,833 becomes a critical support level, with a deeper correction potentially exposing $2,800.
Momentum indicators are mixed. The RSI (Relative Strength Index) remains in bullish territory, indicating further upside potential, while MACD signals show signs of exhaustion. This suggests that while gold has room to climb, it may face near-term resistance.
Geopolitical Risks and Market Volatility Support Gold
Beyond economic data and Fed policy, geopolitical uncertainty continues to be a major driver for gold. The ongoing Russia-Ukraine war, tensions between the U.S. and China, and broader global trade risks are all contributing to market anxiety. Additionally, recent U.S.-Ukraine diplomatic tensions and delays in U.S. military aid have further fueled safe-haven demand.
Investors are also monitoring U.S. relations with Europe, as new tariffs could have broader implications for global markets. If tensions escalate, gold could surge past $2,950 and move toward new all-time highs. However, if trade disputes ease and risk appetite improves, gold’s upside may be capped.
Will Gold Push Toward $3,000 or Face a Correction?
Gold’s rally has been driven by a weaker dollar, trade war fears, and rate cut expectations, but resistance at $2,950 remains a key test. The upcoming U.S. NFP report and Fed statements will provide critical direction. A break above $2,950 could confirm further upside, while failure to hold gains may lead to a pullback toward $2,877-$2,833.
For now, gold remains a buy on dips, but traders should watch resistance levels closely. Will XAU/USD surge past $2,950 and target $3,000, or is the rally running out of steam?
