Gold (XAU) Price Forecast: Are Tariff Concerns Setting the Stage for a Massive Rally?

Did Tariff Fears Just Ignite Gold’s Next Rally?

Gold soared to a record high this week, briefly surpassing $2,800 to $2817 before retreating into the close, as renewed trade tensions and economic uncertainty fueled demand for safe-haven assets. President Donald Trump reaffirmed plans to impose 25% tariffs on imports from Mexico and Canada, while also considering new levies on Chinese goods. This escalated fears of supply chain disruptions and inflationary pressures, pushing investors toward gold.

Despite some early-week weakness, gold ended the week with a strong 1% gain, extending its monthly advance to over 6%. Analysts suggest that as long as uncertainty around trade policies lingers, demand for gold is likely to remain elevated.

Is the Fed Keeping Gold in the Spotlight?

The Federal Reserve’s latest policy decision also played a role in gold’s rally. The central bank left interest rates unchanged, with Fed Chair Jerome Powell emphasizing that further cuts would require clear evidence of slowing inflation or labor market weakness. However, with trade concerns mounting and economic growth showing signs of strain, investors remain skeptical about how long the Fed can hold rates steady.

Economic data released late in the week added another layer of uncertainty. The PCE price index, the Fed’s preferred inflation gauge, showed a 2.6% annual increase, slightly below expectations. While this suggests inflation pressures may be easing, core inflation remains persistent, leaving the Fed in a wait-and-see mode.

Are Central Banks Quietly Fueling Gold Demand?

Beyond macroeconomic uncertainty, central banks continue to accumulate gold as part of their long-term strategy to diversify reserves. Analysts note that steady official sector buying has provided a strong underlying floor for gold prices, reinforcing its role as a hedge against currency risk and geopolitical instability.

At the same time, gold demand in key markets has surged, with reports of increased deliveries to U.S. vaults as investors hedge against trade and financial risks. Market participants are closely watching for signs that this trend will continue, particularly as global tensions remain elevated.

Will Next Week’s Jobs Report Shift the Fed’s Stance?

Looking ahead, all eyes will be on Friday’s U.S. non-farm payrolls report, which could have significant implications for Federal Reserve policy and gold prices. A weaker-than-expected jobs number could increase speculation that the Fed may need to cut rates sooner than anticipated, boosting gold’s appeal. Conversely, a strong labor market reading could reinforce the Fed’s cautious approach, potentially slowing gold’s momentum.

With uncertainty surrounding trade, inflation, and monetary policy, gold remains a key asset for investors seeking stability. The upcoming jobs report could be a major catalyst, setting the tone for the next move in both interest rates and gold demand.

More Information in our Economic Calendar.