- Gold jumps as U.S. President Donald Trump delivers strong remarks on tariffs.
- Recession fears and economic growth concerns persist amid the ongoing trade war.
- Traders increasingly turn to safe-haven assets as reciprocal tariffs loom.
Gold Hits Fresh All-Time High Amid Trade War Escalation
The price of gold (XAU/USD) has surged to a new all-time high, coming just a few cents shy of the critical $3,000 mark. As of Friday, gold has registered a weekly gain of over 2.5%, reflecting strong demand for safe-haven assets. The rally was fueled by increased inflows into bullion after U.S. President Donald Trump responded to European counter-tariffs by threatening a 200% tariff on wine and champagne imports from the region.
Market participants are now bracing for heightened trade tensions, with concerns mounting that Trump will maintain his aggressive stance on tariffs, further impacting global economic growth and risk sentiment. Meanwhile, U.S. Treasury yields hit a five-day high on Thursday before pulling back.
Market Movers: Rally Driven by Economic and Trade Uncertainty
- Tariff Tensions Spark Safe-Haven Demand: President Trump’s aggressive tariff policies continue to raise concerns about economic growth, leading investors to move away from risk assets and into gold-backed funds, according to Bloomberg.
- Jewelry Stocks Surge: Chinese jeweler stocks have seen significant gains this week. Zhejiang Ming Jewelry Co. hit its 10% daily limit for a fourth consecutive session, while Chow Tai Fook Jewellery Group also climbed. Investors are looking at companies poised to benefit from higher gold prices, Bloomberg reports.
- Gold Holdings Below 2020 Peak: According to Marcus Garvey, Head of Commodities Strategy at Macquarie Group, gold holdings remain 20% below their previous peak in 2020, suggesting further room for increased inflows into the market, Reuters reports.
- Fed Rate Expectations Steady: The CME FedWatch Tool indicates a 97.0% probability that the Federal Reserve will keep interest rates unchanged at its March 19 meeting. The likelihood of a rate cut at the May 7 meeting stands at 30.3%.
Technical Outlook: $3,000 Break Approaching, $3,200 in Sight
The $3,000 psychological level is now within striking distance, coming just a day after BNP Paribas projected a $3,200 target price for gold in Q2. With both the European and U.S. trading sessions ahead, a rapid move higher could be imminent. However, traders should be cautious when entering trades at the break of $3,000, as this level is likely to trigger short-term profit-taking.
Key Levels to Watch
- Upside Targets: The current all-time high at $2,993 is expected to be surpassed soon. Above $3,000, technical resistance levels include $3,007 (R1) and $3,026 (R2).
- Downside Support: The daily Pivot Point is at $2,970. If this level breaks, watch for support at $2,951 (S1) and $2,914 (S2). A stronger support level sits at $2,900, which could act as a major floor in case of corrections.
With gold’s bullish momentum showing no signs of slowing, traders and investors should monitor these key price levels closely as the market navigates uncharted territory.
