Gold prices are experiencing upward momentum, driven by safe-haven demand amid escalating US-China trade tensions. Expectations of multiple Federal Reserve rate reductions are exerting downward pressure on the US Dollar, further bolstering the precious metal. Despite a recovery in risk appetite, XAU/USD continues to attract investment.
The ongoing trade dispute between the US and China, coupled with concerns regarding the potential impact of tariffs on economic growth and rising inflationary pressures, are contributing to gold’s appeal as a hedge. The US Dollar’s inability to sustain gains, influenced by market anticipation of Fed rate cuts in 2025, is providing additional support to gold.
However, improved global risk sentiment may temper further bullish positions in XAU/USD. Elevated US Treasury yields could also limit gains as investors await the release of US consumer inflation data. The US-China trade war remains a significant factor supporting gold prices.
