- Gold price demonstrates renewed upward momentum as geopolitical and trade uncertainties bolster demand for safe-haven assets.
- The US Dollar struggles to attract significant buying interest despite the Federal Reserve’s recent hawkish stance.
- Bullish sentiment in the gold market appears resilient, seemingly unaffected by a generally positive risk appetite, which typically exerts downward pressure on the XAU/USD pair.
The Gold price (XAU/USD) is experiencing a resurgence in buying activity during Thursday’s Asian trading session, climbing back above the $3,400 level in recent trading. This reverses a substantial portion of the overnight decline from a two-week high. Comments from US President Donald Trump have dampened expectations for a swift resolution to the ongoing US-China trade dispute, stating that he is in no hurry to finalize any agreements. This, coupled with persistent geopolitical risks stemming from the Russia-Ukraine conflict, ongoing tensions in the Middle East, and heightened military tensions along the India-Pakistan border, is providing a solid foundation for safe-haven assets like gold.
Concurrently, the initial market response to the Federal Reserve’s (Fed) decision on Wednesday to maintain a hawkish stance while holding interest rates steady appears to be short-lived. This is occurring amidst heightened economic uncertainty fueled by President Trump’s evolving trade policies. Consequently, the US Dollar (USD) is failing to capitalize on modest gains from the previous day, further bolstering demand for gold. However, the generally positive sentiment observed in equity markets may be tempering aggressive bullish bets on XAU/USD, potentially limiting any substantial upward movement. Investors are also closely watching key economic indicators, such as inflation data and GDP growth, for further clues about the Fed’s future policy decisions.
Daily Digest Market Movers: Gold price bulls aim to maintain control amid persistent demand for safe-haven assets
- On Wednesday, US President Donald Trump indicated a reluctance to reduce the 145% tariffs currently imposed on Chinese goods as a means to facilitate trade negotiations. This stance is suppressing optimism generated by the announcement of upcoming US-China trade talks later this week and is providing support for the safe-haven appeal of gold.
- Airports in the Moscow region experienced closures due to a significant Ukrainian drone attack, occurring ahead of Russian President Vladimir Putin’s unilaterally declared three-day ceasefire. Furthermore, Ukrainian authorities reported that Russia launched guided bombs nearly three hours after the ceasefire had officially commenced on Thursday.
- In a separate development, the Israeli military announced that it had completely disabled Yemen’s primary airport in Sanaa, the capital city controlled by Houthi rebels. In response, a leading member of the Houthi political organization stated that retaliation for Israel’s actions is imminent. These ongoing geopolitical tensions continue to underpin the XAU/USD pair.
- As widely anticipated, the Federal Reserve maintained its benchmark interest rate within a target range of 4.25%-4.5% at the conclusion of its two-day monetary policy meeting on Wednesday. In the accompanying statement, the US central bank acknowledged increased uncertainty surrounding the economic outlook.
- During the post-meeting press conference, Federal Reserve Chairman Jerome Powell emphasized the significant uncertainty surrounding tariffs and suggested that a cautious approach, awaiting further clarity, is warranted. This indicates that the US central bank is not currently inclined towards immediate interest rate cuts, although this message failed to significantly bolster the US Dollar. Market participants are now scrutinizing upcoming economic data releases for further indications of the Fed’s future policy trajectory.
- President Trump announced on Truth Social that he would unveil a major trade agreement, the first of several, with representatives from a large and highly respected country on Thursday. This development is contributing to a generally positive risk sentiment in equity markets, potentially acting as a headwind for the precious metal.
- Market attention will remain focused on President Trump’s press conference scheduled for 14:00 GMT in the Oval Office. In addition to this event, the release of the US Weekly Initial Jobless Claims data on Thursday will influence US Dollar price dynamics and provide fresh impetus to the XAU/USD pair during the North American trading session.
Gold price poised to potentially retest all-time highs upon clearing the immediate resistance barrier at $3,434-3,435
From a technical analysis perspective, the emergence of renewed buying interest near the $3,260 level, which has transitioned from resistance to support, and the subsequent upward movement favor a bullish outlook for XAU/USD. Furthermore, oscillators on the daily chart remain comfortably within positive territory, suggesting that the path of least resistance for the gold price remains to the upside. Sustained buying momentum beyond the $3,434-3,435 region, representing the weekly high, would reinforce the positive bias and pave the way for the commodity to retest its all-time peak and potentially surpass the $3,500 psychological level.
Conversely, the $3,465-3,460 area is expected to continue serving as an immediate and robust support level, followed by the $3,328-3,327 region and the $3,300 round number. A decisive break below the latter would invalidate the near-term positive outlook and trigger technical selling pressure. Such a downward trajectory could then lead the gold price towards the $3,265-3,260 intermediate support zone, en route to the $3,223-3,222 region and the previous week’s swing low, situated around the $3,200 level.
US-China Trade War FAQs
In general terms, a trade war represents an economic conflict between two or more nations stemming from extreme protectionist policies implemented by one or more parties. This typically involves the imposition of trade barriers, such as tariffs, which in turn lead to retaliatory measures, escalating import costs, and ultimately increasing the cost of living for consumers.
The economic conflict between the United States (US) and China commenced in early 2018, when then-President Donald Trump initiated trade barriers against China, citing unfair trade practices and intellectual property theft allegedly perpetrated by the Asian nation. China responded with retaliatory measures, imposing tariffs on various US goods, including automobiles and soybeans. Tensions continued to escalate until the two countries signed the US-China Phase One trade deal in January 2020. This agreement aimed to address structural reforms and other changes within China’s economic and trade framework, with the intention of restoring stability and trust between the two nations. However, the onset of the Coronavirus pandemic shifted focus away from the conflict. It is worth noting that President Joe Biden, who succeeded Trump, maintained the existing tariffs and even introduced additional levies.
The return of Donald Trump to the White House as the 47th US President has ignited renewed tensions between the two economic powerhouses. During his 2024 election campaign, Trump pledged to impose tariffs of 60% on Chinese goods upon his return to office, which he accomplished on January 20, 2025. With Trump back in power, the US-China trade war is expected to resume where it left off, characterized by tit-for-tat policies that impact the global economic landscape through disruptions in global supply chains. This, in turn, leads to reduced spending, particularly in investment, and directly contributes to inflationary pressures as reflected in the Consumer Price Index.
