Gold prices (XAU/USD) surged to new all-time highs during Wednesday’s Asian session, edging closer to the psychological $3,300 mark. The rally is fueled by persistent safe-haven demand as fears of a prolonged US-China trade war and a potential US recession continue to unsettle global markets. Speculation that the Federal Reserve may cut interest rates up to four times this year is also supporting the non-yielding precious metal.
The US Dollar, meanwhile, struggles to recover from last week’s drop to its lowest level since April 2022, despite growing expectations of aggressive Fed easing. This has further bolstered gold’s upward momentum, which appears unaffected by overbought technical indicators. Investors now turn their attention to upcoming comments from Fed Chair Jerome Powell for clarity on future rate moves—key for short-term USD and gold price direction.
Market Movers Snapshot
-
Tariff Turmoil: Last week, President Trump unexpectedly paused reciprocal tariffs for 90 days and hinted at exemptions on auto-related duties. However, he maintained a 145% tariff on select Chinese imports and warned of upcoming levies on semiconductors and pharmaceuticals—stoking further uncertainty.
-
China’s Retaliation: In response, China hiked tariffs on US goods to 125%, escalating concerns over a full-blown trade war that could dampen global growth. This geopolitical tension continues to boost demand for gold.
-
Investor Sentiment Wanes: Trump’s inconsistent tariff strategy has shaken investor confidence in US economic policy. At the same time, expectations for a 100 basis point rate cut by the Fed in 2025 have driven the USD sharply lower.
-
China’s Growth Surprises: China’s economy grew 5.4% in Q1 year-over-year, surpassing forecasts. Retail Sales, Industrial Production, and Fixed Asset Investment also outperformed, though optimism was overshadowed by trade war concerns.
With markets on edge, gold appears set to extend its rally. All eyes are now on Powell’s speech and further trade-related headlines, which are likely to steer the next move in the XAU/USD pair.
