Gold price climbs for the fifth time in six sessions, breaking above $3,280 during the Asian session.
Gold (XAUUSD) prices are on a relentless upward trajectory, smashing previous records as investor anxiety mounts over escalating trade tensions between the United States and China. On Wednesday, gold touched a fresh all-time high near the $3,283–$3,284 range, extending its impressive bullish run.
This latest rally marks the second consecutive daily advance and the fifth positive session in the past six trading days, highlighting the strength of safe-haven demand. Investors continue to favor gold as a protective hedge amid fears of an intensifying trade war and a weakening US economic outlook.
Gold Soars as Market Dismisses Tariff Pause and Focuses on Deeper Policy Chaos
US President Donald Trump’s recent announcement to pause reciprocal tariffs for 90 days initially sparked hopes of a temporary trade truce. However, the relief was short-lived. The rapid succession of contradictory policy shifts, coupled with threats of new tariffs on semiconductors and pharmaceuticals, has eroded investor confidence in US trade policy.
While Trump removed steep tariffs on smartphones, computers, and select electronics, he maintained a crushing 145% duty on other Chinese imports. This partial rollback was not perceived as a signal of de-escalation but rather a tactical pause before the next round of aggressive trade actions.
In retaliation, China escalated tensions by hiking tariffs on US goods to 125%, underscoring a worsening economic standoff. The tit-for-tat measures between the world’s two largest economies have investors worried about a slowdown in global growth, driving them towards the safety of gold.
Federal Reserve’s Expected Policy Pivot Amplifies XAUUSD Momentum
While geopolitical risks are driving demand for safe-haven assets, the Federal Reserve’s anticipated policy shift is further fueling the gold rally. Market participants now widely expect the Fed to implement aggressive rate cuts in 2025, with bets increasing for a total of 100 basis points in easing.
These expectations stem from mounting signs of a decelerating US economy and deteriorating business confidence. As the Fed leans dovish, the opportunity cost of holding non-yielding gold diminishes, making it more attractive in a low-rate environment.
Moreover, the growing divergence between the Fed and other global central banks – particularly those still maintaining hawkish stances – has weakened the US Dollar significantly. The DXY index recently plunged to its lowest level since April 2022, amplifying gold’s appeal for foreign investors.
China’s Economic Data Impresses, but Trade Concerns Eclipse Optimism
China’s latest economic indicators revealed a stronger-than-expected performance in Q1 2025. The economy expanded by 5.4% year-on-year, surpassing analyst forecasts. Retail Sales, Industrial Production, and Fixed Asset Investment also beat estimates, reflecting solid domestic demand and investment activity.
However, these positive macroeconomic surprises failed to boost market sentiment, largely due to the growing uncertainty surrounding US-China trade dynamics. Investors appear to be prioritizing geopolitical risks over data-driven optimism, reinforcing the case for further gold inflows.
Technical Overview: Gold Overbought Rally Still Supported by Fundamentals
From a technical standpoint, the XAU/USD pair continues to demonstrate remarkable strength, defying conventional overbought conditions. Momentum indicators like the RSI and MACD suggest extended upside, yet there is little sign of exhaustion as the metal feeds off fresh catalysts almost daily.
The psychological level at $3,300 is now within striking distance, with potential for even higher levels if Powell’s speech or new trade developments deepen the risk-off sentiment. Immediate support rests around $3,250, followed by a stronger base near $3,200.
Upcoming Event: Powell’s Speech Could Trigger Next Big Move
All eyes now turn to Federal Reserve Chair Jerome Powell, who is scheduled to speak later today. Investors are keenly awaiting any signals regarding the Fed’s next policy moves, especially in light of recent inflation data and geopolitical tensions.
Should Powell confirm a dovish stance or hint at imminent easing, it could accelerate the downward spiral in the USD and provide another strong tailwind for gold. On the other hand, any signs of policy patience or hawkish caution might trigger a mild pullback in the precious metal.
Conclusion: Gold Rally Driven by Fear, Fundamentals, and Fed Expectations.
In essence, the ongoing rally in gold is not merely a product of technical momentum or short-term noise. It reflects a deeper market concern about global trade stability, central bank credibility, and the economic path ahead. As long as trade-related jitters persist and the Fed maintains its easing bias, gold remains well-supported.
Unless geopolitical tensions ease dramatically or US economic data stages a surprise rebound, the path of least resistance for XAUUSD appears to remain upward – potentially targeting $3,300 and beyond.
