Gold prices surged to a new high above the $3,000 level this week as the dollar remains under pressure.
XAUUSD – Daily Chart
The price of XAUUSD has moved above resistance at the $2,958 level to reach a new high above $3,043. Unless there is a shift in the U.S. dollar, then it can continue to increase.
Markets expect the gold rally to continue due to economic slowdown and recession risks, partly driven by President Donald Trump’s tariffs.
Peter Walden, director at BullionByPost, the UK’s largest online dealer, said:
“Since January, following president Trump’s inauguration — and with activity peaking in February — we’ve observed a marked rise in retail investors seeking to add physical gold to their portfolios. Amid economic uncertainty and inflation concerns, many are turning to gold as the ultimate safe haven”.
His company has seen an increase of 137% in gold sales this year compared to last.
The gold price has paused in the last two days after the Federal Reserve kept rates steady and Fed Chair Jerome Powell said the impact of tariffs would be short-term.
“I think that’s kind of the base case,” he said, adding that the central bank can’t really know the total impact tariffs will have at this moment. However, some analysts are not convinced that the tariff effects will be “transitory”.
“The risk is that tariffs could have a longer-lasting effect on inflation if additional tariffs are added later this year, or if tariffs push up inflation expectations and wage expectations,” Apollo Chief Economist Torsten Slok told Fortune.
Trump said the central bank should cut interest rates while the tariffs work their way into the economy.
The U.S. dollar unwind has been a big contributor to the recent gold move, and investors see central bank gold buying continuing to support the upward trend. With the current mood, any pullback could be seen as a discount for many bullish traders.
