Gold Price Climbs to Record Levels on Trade Tensions and Fed Rate-Cut Outlook

Gold Price Reacts To Escalating Tariff Threats

The price of Gold (XAU/USD) surged to a new intraday peak of $3,470.30 on Thursday, extending gains after opening futures at $3,431.80, up 1.5% from Wednesday’s $3,380 settlement. This fresh advance reflects safe-haven flows sparked by President Trump’s decision to double tariffs on Indian imports to 50% and threaten Japan with an extra 15% duty, reviving fears of a global trade war. Earlier this week, Trump warned of 100% levies on semiconductors unless manufacturers invest in the U.S., amplifying uncertainty around consumer prices and economic growth. The resulting trade jitters have underpinned demand for non-yielding XAU/USD, driving its weekly gain to 4.9%, month-to-date rise of 3.8%, and a remarkable 43.5% climb year-over-year.

Federal Reserve Rate Cut Expectations And Dollar Movements

Gold’s rally has also been fueled by growing consensus that the Federal Reserve will resume cutting rates in September. After Friday’s soft Nonfarm Payrolls and Tuesday’s ISM Services PMI miss at 50.1 (vs. 50.8 prior), CME Group’s FedWatch Tool assigns over a 90% probability to a 25-basis-point cut in September, with the market pricing in at least two cuts by year-end totaling 50 bps. Despite these dovish expectations, the U.S. Dollar Index has only managed a modest rebound from a one-week low, trading near 98.25, capping further upside in gold. U.S. 10-year Treasury yields climbed to 4.24%, exerting pressure on precious metals, yet the subdued recovery in USD sentiment continues to tilt the scales in favor of XAU/USD.

Technical Analysis Of XAU/USD Support And Resistance

From a chart perspective, Gold has struggled to sustain momentum beyond the $3,380–$3,385 zone on the daily timeframe, where mixed oscillator readings suggest traders remain cautious. The 4-hour chart tells a more constructive story: price found support at the 200-period Simple Moving Average near $3,350, igniting follow-through buying. A clear break above $3,400 would confirm bullish conviction and open intermediate hurdles at $3,420–$3,422, before challenging the supply cluster around $3,434–$3,435. Beyond that, the psychological $3,500 level—last tested in April—looms as the next major obstacle. On the downside, a slide below $3,350 risks a retracement to $3,315, with the round-figure $3,300 and the May low at $3,268 in sight if sellers intensify.

Global Safe-Haven Demand And Central Bank Accumulation

Amid rising geopolitical and trade tensions, central banks continue to diversify reserves into gold. Russia and China have collectively added over 200 tonnes of bullion in H1 2025, underscoring policymakers’ quest for currency hedges. Private investors, too, have flocked to gold ETFs, pushing net inflows to $4 billion over the past month. While equities have enjoyed record highs, the yellow metal’s recent outperformance highlights its enduring role as portfolio ballast. Notably, Citi lifted its three-month target for gold from $3,300 to $3,500, citing persistent tariff-driven inflation risks, a weaker dollar and ongoing concerns over U.S. growth.

Trading Strategy Recommendation For Gold

Given the confluence of strong safe-haven flows, dovish Fed expectations and technical support near $3,350, the tactical stance on Gold (XAU/USD) is to accumulate on intraday dips toward $3,370–$3,380. A sustained push through $3,400 should be met with fresh long positions, targeting $3,434 and $3,500 in successive phases. Risk management calls for a stop-loss beneath $3,350 to guard against a deeper reversal toward $3,300. Overall, the outlook remains bullish, but participants must remain vigilant for profit-taking triggered by sharp U.S. yield spikes or a sudden USD rebound.

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