Gold Surges Past $3,000 as Trade War Risks Weigh on Global Growth

• Gold prices attract renewed buying interest as global trade tensions rise and recession concerns intensify.
• Increasing US bond yields may pose a challenge ahead of the release of the FOMC meeting minutes.
• Expectations of several rate cuts by the Fed put pressure on the USD, providing support for the precious metal.

Gold (XAU/USD) has regained positive momentum after failing to break the $3,022-$3,023 resistance level in the previous session, reclaiming the $3,000 mark during the Asian session on Wednesday. Ongoing concerns about rising trade tensions and recession fears are pushing investors toward gold, traditionally seen as a safe-haven asset. Additionally, expectations of multiple interest rate cuts by the Federal Reserve this year and continued US Dollar weakness are supporting the appeal of the non-yielding metal.

At the same time, speculation that China may be selling US Treasuries in response to US tariffs has fueled a selloff in US government bonds. This may dampen enthusiasm among traders to make new bullish bets on gold, potentially limiting further price gains ahead of the release of the Federal Open Market Committee (FOMC) meeting minutes later today. Market participants will also look to US inflation data this week for insights into the Fed’s rate-cut plans, which could impact the direction of XAU/USD. Given these factors, caution is advised before concluding that the recent pullback from gold’s all-time highs is over.

Gold Price Sees New Buyers as Market Uncertainty Boosts Safe-Haven Appeal

• White House Press Secretary Karoline Leavitt announced that the US will implement a significant 104% tariff on Chinese imports starting this Wednesday. This development heightens concerns about a potential full-scale trade war, which could drive the global economy into recession. As a result, there is a renewed shift towards risk-averse trading, boosting demand for gold as a safe-haven asset.
• This, in turn, drags the US Dollar lower for the second straight day despite the overnight hawkish comments from Fed officials. In fact, San Francisco Fed President Mary Daly said on Tuesday that the policy is in a very good place and modestly restrictive. Daly further noted that inflation pressure from widespread tariffs is an increasing concern.
• Separately, Chicago Fed President Austan Goolsbee said that US tariffs are way bigger than anticipated and pose a real risk to US importers who have very few fallback options. The relationship of sentiment to spending isn’t as strong as before and It’s not obvious how the Fed would react to negative supply shock, Goolsbee added further.
• Investors are now anticipating the release of the minutes from the Fed’s most recent policy meeting. In addition, the US Consumer Price Index (CPI) and Producer Price Index (PPI) set to be released on Thursday and Friday, respectively, will be closely examined for insights into the Fed’s future policy direction. These data points are expected to influence the USD in the short term and have an impact on the XAU/USD pair

Gold Price Must Overcome $3,022-$3,023 Barrier to Support Further Upside Potential

From a technical standpoint, the recent sharp decline from the all-time high found support near the 61.8% Fibonacci retracement level of the February-April rally, which is around the $2,957-$2,956 range. This level corresponds to a multi-week low observed on Monday, followed by the 50-day Simple Moving Average (SMA), currently around $2,952. A decisive break below this area could signal further bearish momentum, pushing the Gold price toward the next significant support near the $2,920 zone, potentially extending toward the $2,900 level.

On the other hand, a move above the recent high around $3,023 could lead to a test of the $3,055-$3,056 resistance zone. Continued buying momentum could then propel the price toward the $3,100 mark, with intermediate resistance likely near the $3,075-$3,080 region.