Gold (XAU) Price Forecast: Is $3,000 Within Reach as Inflation Pressures Mount?

Gold Prices Hold Near Record Highs as Trade Tensions and Inflation Risks Support Demand

Gold remains near its record highs, extending its multi-week rally as investors seek protection against economic uncertainty. Persistent inflation, U.S. trade policy concerns, and shifting Federal Reserve expectations continue to drive gold’s appeal as a safe-haven asset.

Technically, the trend is up. A trade through $2942.78 will signal a resumption of the uptrend. The nearest support is a short-term pivot at $2739.81.

The week begins with the market in the midst of 7 week rally, which makes it vulnerable to a potentially bearish closing price reversal top.

Last week, XAU/USD settled at $2882.48, up $21.23 or +0.74%.

Trade War Concerns Continue to Underpin Gold Demand

Gold’s strength this week has been fueled by growing trade tensions after U.S. President Donald Trump signed an executive order targeting foreign nations’ trade policies. The plan introduces reciprocal tariffs on countries imposing taxes on U.S. imports, raising fears of a prolonged trade standoff.

Although Trump held off on immediate tariff implementation, the move injected fresh uncertainty into global markets. This uncertainty has supported gold prices, as investors remain wary of retaliatory actions from key trading partners and the broader economic impact of potential new tariffs.

Inflation Data Reinforces Concerns Over Price Pressures

Recent U.S. inflation reports showed stronger-than-expected price increases, adding to concerns that inflation remains persistent. The Consumer Price Index (CPI) rose 0.5% in January, surpassing expectations, while wholesale inflation, measured by the Producer Price Index (PPI), climbed 3.5% year-over-year. Both readings suggest inflationary pressures that could keep the Federal Reserve cautious on rate cuts.

However, some aspects of these reports hint at a potentially softer reading in the upcoming Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge. Markets will closely watch this data for further insight into the inflation outlook.

Weaker Retail Sales Raise Questions About Economic Momentum

U.S. retail sales unexpectedly dropped 0.9% in January, a sharper decline than the forecasted 0.2% drop. While December’s figures were revised higher, the weaker-than-expected retail data has cast doubt on the strength of consumer spending, a key driver of economic growth.

The report led to a decline in Treasury yields, easing some concerns about an overheating economy. However, yields remain elevated compared to earlier in the year, reflecting market uncertainty over the Fed’s next move.

Gold Prices Forecast: Bullish Bias Holds, but Inflation Data Remains Key

Gold’s broader uptrend remains intact, with trade war risks and inflation concerns keeping safe-haven demand strong. While weaker retail sales have slightly tempered fears of aggressive Fed tightening, upcoming inflation data (PCE Index) will be critical in determining gold’s next move.

If inflation shows signs of cooling, gold may face resistance at current levels. However, persistent price pressures and trade-related uncertainty provide a strong foundation for continued upside. Traders should remain focused on upcoming economic reports and any shifts in Fed rhetoric to gauge gold’s next direction.

More Information in our Economic Calendar.