Gold News: US Tariff Threats and Weaker Dollar Fuel Safe-Haven Demand

Gold Prices Edge Higher as Traders Eye Key Support and Resistance Levels

Gold is moving higher on Monday after hitting a three-week low of $2832.72 in the previous session. Traders are closely watching a key retracement zone between $2864.26 and $2843.43, where gold is attempting to establish support. If buying momentum continues, resistance is expected between $2895.29 and $2910.32, with a potential breakout leading to a test of the record high at $2956.31.

On the downside, a break below $2832.72 would signal renewed selling pressure, with key targets at $2790.17, followed by the 50-day moving average at $2775.78. A further decline could bring gold into the short-term retracement zone between $2770.11 and $2726.17.

At 13:06 GMT, XAU/USD is trading $2873.60, up $15.46 or +0.54%.

Weaker US Dollar and Tariff Concerns Bolster Gold’s Appeal

A weaker US dollar is supporting gold, as the dollar index has dropped 0.6% from a recent two-week high. This decline makes gold more attractive to foreign buyers, reinforcing its safe-haven demand.

Investor sentiment is also being driven by escalating trade tensions. President Trump has threatened an additional 10% tariff on Chinese goods, which would raise cumulative tariffs to 20%. Uncertainty surrounding these trade policies is fueling demand for gold as a hedge against economic instability.

Despite gold’s retreat in the previous session, the metal’s downside remains limited due to ongoing geopolitical risks and concerns over slowing global growth.

Gold’s Outlook Hinges on US Interest Rate Expectations

Gold lost over 1% in the last session following US inflation data that suggested the Federal Reserve may not be as aggressive in cutting interest rates. Since gold does not yield interest, higher rates typically make it less appealing to investors. However, expectations around the Fed’s policy could shift again based on upcoming data releases, particularly the US payrolls report later this week.

UBS analysts remain bullish on gold, maintaining their forecast for gold to reach $3,000 this year, with the potential to hit $3,200 in risk-driven scenarios. They also see potential for silver to gain if gold consolidates and global industrial production shows signs of recovery.

Gold Price Forecast: Bulls Need to Defend Key Support Levels

Gold’s immediate direction depends on whether buyers can defend the $2843.43–$2864.26 support zone. A strong rebound could see gold challenge $2895.29–$2910.32, with a possible breakout toward record highs.

Conversely, a drop below $2832.72 would put the market under renewed pressure, increasing the likelihood of testing $2790.17 and the 50-day moving average at $2775.78.

For now, gold’s upside bias remains intact, but traders should watch the dollar’s movement and upcoming US economic data for further confirmation of trend direction.

More Information in our Economic Calendar.