Gold (XAU) Price Forecast: Rally Builds as Treasury Yields Slide and Dollar Weakens

Gold Prices Surge on Weaker Dollar and Safe-Haven Demand

Gold prices are climbing sharply as demand rises on the back of falling Treasury yields and a weaker U.S. dollar. After establishing support near $2,864.76 to $2,843.43 last week, buyers are now targeting a breakout above the key resistance zone of $2895.29 to $2,910.32. A push beyond this level could bring the record high of $2,956.31 into focus.

With the 50-day moving average trending upward at $2,782.12, gold remains well-supported, reinforcing a “buy the dip” strategy among traders.

At 13:13 GMT, XAU/USD is trading $2925.79, up $32.81 or +1.13%.

Safe-Haven Demand Rises as Trade War Escalates

Gold is benefiting from increased safe-haven inflows as global trade tensions escalate. President Donald Trump’s newly imposed tariffs on Canada, Mexico, and China have sparked fears of economic instability. The U.S. has slapped a 25% duty on Mexican and Canadian imports while doubling tariffs on Chinese goods to 20%. In response, China has announced retaliatory tariffs ranging from 10% to 15% on select U.S. imports, including agricultural products.

Market analysts see this as a major risk factor pushing investors toward gold as a hedge. “With Trump 2.0 delivering exactly the chaos he promised, Western investors are joining emerging-market central banks in buying gold as an all-weather hedge,” said Adrian Ash, head of research at BullionVault.

Falling Treasury Yields Provide Additional Support

The benchmark 10-year Treasury yield has dipped to 4.168%, while the 2-year yield has dropped to 3.931%, reflecting market uncertainty following Trump’s tariff escalation. Lower yields tend to boost gold’s appeal by reducing the opportunity cost of holding non-yielding assets.

A weaker U.S. dollar is also adding to gold’s momentum. The dollar index fell 0.48% to 106.78 as currency markets reacted to trade tensions and potential shifts in Federal Reserve policy. The euro has strengthened to $1.0468, while the Canadian dollar and Mexican peso have slipped to one-month lows.

Key Economic Data to Watch

Traders are now focused on upcoming U.S. economic reports, including Wednesday’s ADP employment data and Friday’s nonfarm payrolls report. A weaker-than-expected jobs report could increase the likelihood of Federal Reserve rate cuts, further supporting gold prices. Analysts at UBS see a re-test of gold’s highs in the coming weeks, while J.P. Morgan projects gold to approach $3,000 an ounce by late 2025.

Gold Prices Forecast: Bullish Outlook Prevails

Gold’s strong upward momentum, supported by safe-haven demand, weaker Treasury yields, and a declining U.S. dollar, suggests a bullish outlook. With geopolitical risks and trade conflicts escalating, gold remains a preferred asset for investors seeking stability.

A successful breakout above $2,910.32 could pave the way for a move toward the all-time high of $2,956.31 and beyond. Traders will be closely watching economic data this week for additional confirmation of the market’s direction.

More Information in our Economic Calendar.