Gold price surges to a new record high near $3,300, driven by trade war tensions and a weakening US Dollar

Gold price (XAU/USD) continues to reach new record highs as it heads into the European session on Wednesday, with bulls aiming to surpass the $3,300 mark. The ongoing trade-related uncertainties are driving increased demand for safe-haven assets, while fears of a US recession and growing expectations of more aggressive policy easing by the Federal Reserve (Fed) are also fueling flows into the non-yielding yellow metal.

Additionally, the bearish sentiment surrounding the US Dollar (USD), driven by uncertainty over US President Donald Trump's trade policies and diminishing confidence in the US economy, further supports Gold’s upward momentum. Despite short-term charts showing slightly overbought conditions, the strong buying interest appears to remain intact. Investors are now awaiting fresh insights from Fed Chair Jerome Powell’s remarks to potentially influence market direction.

Daily Digest: Market Movers – Gold Price Surge Unwavering Amid Global Rush to Safety

• US President Donald Trump made an abrupt policy shift last week, backing off his previously proposed reciprocal tariffs on most US trading partners for 90 days. He also suggested that some auto-related levies might be exempted, following his decision to remove smartphones, computers, and certain electronics from steep tariffs on Chinese imports.
• Trump clarified that these exemptions would be temporary, while keeping a 145% tariff on other Chinese goods in place. Additionally, he warned of new tariffs on imported semiconductors and hinted at imposing levies on pharmaceuticals in the near future, heightening market uncertainty.
• In response, China raised its tariffs on US imports to 125%, intensifying concerns that an escalating trade war between the world's two largest economies could harm global growth. These developments continue to dampen investor sentiment, providing support for safe-haven assets like Gold, which surged to a fresh record high on Wednesday.
• Trump’s abrupt policy shifts have eroded confidence in US economic policies, further weakening the US Dollar (USD). Market expectations that the Federal Reserve (Fed) may cut interest rates by 100 basis points in 2025 pushed the USD to its lowest level since April 2022. Meanwhile, Chinese economic data released earlier this Wednesday showed a 5.4% growth in GDP in Q1 2025, exceeding expectations, and strong Retail Sales, Industrial Production, and Fixed Asset Investment figures, though trade tensions with the US overshadowed the positive numbers.
• Investors are now awaiting comments from Fed Chair Jerome Powell for further guidance on the US interest rate outlook, which will play a crucial role in shaping USD price dynamics. Trade-related developments are expected to continue driving the XAU/USD pair, which seems set to extend its upward trend.

Gold Price Bulls Reluctant to Give Up Despite Overbought Conditions on Short-Term Charts

From a technical perspective, the Relative Strength Index (RSI) on the daily and 4-hour charts is showing slightly overbought conditions, suggesting caution for bullish traders. Therefore, it might be wise to wait for some short-term consolidation or a slight pullback before targeting further upward movement in Gold prices.

In the event of a corrective pullback, support could be found around the $3,246-3,245 area ahead of the Asian session low near $3,230-3,229. A deeper pullback may still be seen as a buying opportunity, with the $3,200 round-figure mark likely offering strong support.