Gold News: Market Awaits CPI Data and Powell Testimony—Will It Break Out or Correct?

Gold Hits Record High as Trade War and Fed Uncertainty Fuel Safe-Haven Demand

Last week, XAU/USD settled at $2861.25, up $63.31 or +2.26%.

Technically, the main trend is up. A trade through $2886.86 will signal a resumption of the uptrend. The nearest support is the former top at $2790.17. While we don’t expect a change in trend, the market is at risk for a shift in momentum or a near-term correction.

Tariff Battles Reignite as China Hits Back

Gold’s latest leg higher was fueled by renewed U.S.-China trade tensions. President Trump imposed fresh tariffs on Chinese goods while granting a temporary reprieve to Mexico and Canada. In response, Beijing introduced retaliatory duties, including a 15% tariff on U.S. liquefied natural gas.

These trade disruptions have fueled inflation concerns, as higher import costs threaten to keep consumer prices elevated. With the Fed already cautious on rate cuts, prolonged tariff battles could delay policy easing, further supporting gold’s appeal as an inflation hedge.

Fed Stands Firm as Inflation Risks Rise

The Federal Reserve held its benchmark rate at 4.25%-4.50% in its most recent meeting, emphasizing the need for sustained progress on inflation before considering cuts. Several Fed officials warned that tariff-driven price pressures could keep policy tighter for longer than markets expect.

Bond markets reflected this uncertainty, with Treasury yields holding firm. The 10-year yield edged higher, signaling investor skepticism over near-term rate cuts. Meanwhile, the U.S. dollar remained resilient, limiting gold’s upside but failing to derail the broader uptrend.

Physical Demand Struggles as Prices Surge

Despite gold’s strong investment demand, physical buying remains weak in key consumer markets. High prices have deterred buyers in India and China, with the Perth Mint reporting its lowest gold sales in 10 months. However, central banks—particularly the People’s Bank of China—continue accumulating reserves, providing a structural floor for prices.

Gold Prices Forecast: CPI, PPI, and Powell Testimony in Focus

This week, U.S. inflation data and Powell’s congressional testimony will be key catalysts. A stronger-than-expected CPI or PPI report could reinforce the Fed’s cautious stance, limiting near-term upside for gold. However, any signs of disinflation would fuel expectations of earlier rate cuts, triggering another breakout.

Gold’s uptrend remains intact, but overbought conditions suggest a pullback is possible if data skews hawkish. Key support levels should be monitored for potential dip-buying opportunities. Traders should brace for heightened volatility as inflation figures and Fed rhetoric take center stage.

More Information in our Economic Calendar.