Gold (XAUUSD) regained its upward momentum in the Asian session on Thursday, buoyed by renewed safe-haven demand triggered by fresh US trade actions and rising market bets on an imminent Federal Reserve interest rate cut. Prices rebounded from previous session losses, although upside remains limited by a modest recovery in the US Dollar and an overall stable risk tone across global markets.
Trump’s Trade Salvo Jolts Global Markets
In a move that reignited fears of global trade fragmentation, former US President Donald Trump signed an executive order imposing an additional 25% tariff on Indian imports, retaliating against India’s continued oil trade with Russia. This pushes the total tariff burden on Indian goods to a staggering 50%.
Simultaneously, speculation is mounting that similar punitive actions could be directed toward Japan, with a 15% tariff reportedly under discussion for all Japanese imports. Furthermore, Trump hinted at looming tariffs on semiconductor and pharmaceutical products, decisions expected within the coming week.
These developments have shaken investor sentiment, reviving memories of the 2018–2019 trade war era. As tensions mount, capital is increasingly rotating into traditional safe-haven assets, with gold emerging as a key beneficiary. The non-yielding yellow metal typically attracts flows during geopolitical instability and trade uncertainty.
Fed Cut Speculation Keeps Gold Supported
Adding to the bullish momentum in gold, investors are increasingly convinced that the US central bank is on track to resume monetary easing. Markets are now pricing in over a 90% probability of a 25-bps rate cut in September, according to the CME FedWatch Tool.
This dovish sentiment stems from recent weak US macroeconomic data, including the underwhelming Nonfarm Payrolls report last Friday and a poor ISM Services PMI reading earlier this week. Fed policymakers have signaled a cautious outlook, and traders now anticipate two full rate cuts by the end of 2025.
Despite this, the US Dollar managed a modest rebound from Wednesday’s one-week low. While this slightly capped gold’s upside, the currency’s failure to sustain a broader recovery has kept the precious metal underpinned.
Technical Outlook: Caution Still Advised Near Resistance
Technically, XAUUSD is trading near $2,370, holding above the 50-day EMA and maintaining a bullish posture. However, resistance eyed near $2,385, followed by the key psychological barrier at $2,400. Support seen around $2,355, with deeper downside protection at $2,330. A break above $2,385 could trigger fresh momentum toward yearly highs, but failure to clear this barrier may invite profit-taking.
Conclusion
Gold continues to benefit from a mix of geopolitical risks and dovish monetary expectations. While safe-haven flows are lending strength to XAUUSD, traders remain cautious due to a modest USD rebound and a resilient equity market tone. With key US data and FOMC commentary due later in the day, short-term volatility in gold remains a strong possibility.
Disclaimer: This blog is for informational purposes only and does not constitute financial advice. Always conduct your own research and consult a professional advisor before making investment decisions.
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