Gold Surges to Record High Amid Escalating Trade War Fears

Market Overview

Gold price surged to fresh all-time highs around $2,950, continuing the bullish momentum as investors fled to safe-haven due to growing trade war concerns. Uncertainty prevails after the US President announced tariffs on imported goods to be active from April 02. The economic turmoil led rally brought previous metal at a striking distance from a lofty $3,000 mark. 

Fundamental Analysis

Declining US yields have shifted investors’ sentiment towards gold, rendering non-yielding assets more attractive. Moreover, the US dollar struggles to sustain the recent gains, boosting gold demand. Market participants anticipate gold’s uptrend to hit the $3,000 mark. 

However, the Fed’s hawkish stance could pour water on the gold rally. The recent FOMC minutes reinforced the odds of maintaining higher rates for a prolonged period. According to LSEG data, a 38 bps cut is expected by December. However, the Fed is cautious about inflationary risk. 

Besides inflation and trade war concerns, central bank purchasing is another key factor behind gold’s bullishness. The Irish Central Bank doubled its gold reserves as part of its long-term diversification strategy. Mark O’Byrne from Tara Gold and Silver says that central banks worldwide have been reducing their dependence on the US dollar and turning to gold. 

Coming up next, initial jobless claims from the US, followed by Philly Fed Manufacturing Index data, will be key to watch for today. Moreover, tomorrow’s PMI data may also influence trends in gold prices. 

Technical Analysis

The 1-hour chart shows a solid uptrend with no significant correction yet. The oscillators point to an overbought scenario as well. Hence, there is a risk of technical correction around psychological levels. However, the key SMAs are pointing north, which is a strong buy signal. With a 20-period SMA at 2920, the downside seems limited. 

• share