Gold (XAU) Price Forecast: Safe-Haven Demand Surges as Trump’s Tariff Plans Shake Markets

Gold Hits Record High as Trump’s Tariff Plans Fuel Safe-Haven Demand

Gold surged past $2,900 on Monday, setting a new record high at $2,906.35, as safe-haven demand intensified following fresh tariff threats from U.S. President Donald Trump. The rally marks gold’s seventh record this year, with no clear resistance in sight. The nearest support level sits at $2,834.27, with key support at the former top of $2,790.17. A break below these levels could shift momentum lower, though the broader uptrend remains intact.

At 11:40, GMT, XAU/USD is trading $2904.79, up $43.54 or +1.52%.

Trump’s Tariffs Stoke Market Uncertainty, Boosting Gold

Trump announced on Sunday plans to impose a 25% tariff on all steel and aluminum imports, alongside reciprocal tariffs matching other nations’ trade policies. This move has heightened fears of a global trade war, driving investors into gold as a hedge against economic uncertainty.

Safe-haven flows have been a dominant force behind gold’s rally, with geopolitical risks and economic policy concerns adding to bullish sentiment. With markets bracing for more details on the new tariffs, gold is expected to maintain its upward bias, barring any unexpected shifts in monetary policy.

All Eyes on U.S. Inflation Data and Fed Policy Signals

Traders are now closely watching key U.S. economic data, particularly the Consumer Price Index (CPI) report due Wednesday, followed by the Producer Price Index (PPI) and jobless claims on Thursday. A hotter-than-expected CPI print could delay expectations for a Federal Reserve rate cut, potentially prompting some profit-taking in gold.

Federal Reserve Governor Adriana Kugler reinforced the central bank’s cautious stance, stating that it remains “prudent” to keep rates steady given the strong labor market and ongoing inflation concerns. Meanwhile, Fed Chair Jerome Powell is set to testify before Congress this week, where any hawkish signals could impact gold’s momentum.

Gold Supply Tightens as London Vault Holdings Decline

Adding to the bullish case, gold inventories in London vaults fell 1.7% in January to 8,535 metric tons, valued at $771.6 billion. The London Bullion Market Association attributed the decline to increased shipments to the U.S., underscoring strong demand for physical gold.

Market Forecast: Gold Eyes $3,000 as Momentum Holds

With mounting geopolitical risks and inflation uncertainty, gold remains well-positioned to extend its rally. A break above $2,906.35 could open the door to the psychological $3,000 level, as traders seek refuge from policy-driven volatility. However, a stronger-than-expected CPI report or hawkish Fed signals could trigger short-term pullbacks. Until there is clarity on the Fed’s rate path, gold’s upside bias remains intact.

More Information in our Economic Calendar.