Gold price trends continues to showcase a positive trend, marking its third consecutive day of gains on Wednesday. It hovers near its peak since November 1, during the early European trading session. Rising uncertainties surrounding US trade policies have significantly increased the demand for safe-haven assets like gold. Additionally, expectations of the Federal Reserve implementing two interest rate cuts this year further support this upward momentum.
Factors Supporting Gold Price Growth
While gold prices are benefitting from haven flows, a mix of market optimism, rebounding US Treasury bond yields, and a slight recovery in the US Dollar (USD) exerts some resistance. Despite these factors, the broader market conditions remain favorable for bullish traders, suggesting any price corrections will likely present opportunities for buying.
Trade War Fears Drive Gold Prices Higher
New trade tensions have contributed to gold’s positive performance. US President Donald Trump’s recent statement about imposing 25% tariffs on Canada and Mexico triggered concerns about a potential global trade conflict. This uncertainty has heightened the appeal of gold as a safe investment, propelling prices to their highest levels since November.
Additional support stems from easing inflationary pressures in the US, reinforcing speculation that the Federal Reserve might consider rate cuts later this year. This sentiment, coupled with geopolitical developments like the Israel-Hamas ceasefire agreement and easing tensions over Ukraine, bolsters the positive outlook for gold price trends.
Key Market Influences
The USD showed signs of recovery during the Asian trading session on Wednesday, reducing gold’s gains slightly. However, upcoming events, such as the Bank of Japan’s policy announcement and global PMI data, could spark volatility and provide fresh catalysts for gold prices.
Technical Analysis: Gold Breaks $2,720 Resistance
From a technical perspective, gold’s breakout above the $2,720 level signals renewed bullish momentum. Indicators on the daily chart suggest room for further growth, with the next resistance zones at $2,748-$2,750. If this level is surpassed, the metal may aim for the all-time high near $2,790, recorded in October 2024.
On the downside, any pullback is expected to remain limited near $2,725-$2,720. A decisive break below this could lead to further declines toward the $2,700-$2,690 support zone. A drop beyond this level might trigger aggressive selling, pushing prices to the $2,660-$2,625 range, where a confluence of technical indicators provides robust support.
Conclusion
Gold remains an attractive investment amid trade war concerns and fluctuating market conditions. Investors should monitor key events like central bank decisions and global economic data for further guidance on gold price movements.
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