- Gold has hit a new 2025 high as President Trump's comments on trade raise investor concerns.
- Despite the rise in the US dollar index, the rise in gold indicates strong demand for safe-haven assets.
- Geopolitical tensions in the Middle East are escalating in tandem with the possibility of US economic policy towards Russia.
Gold prices rose more than 0.39% in late North American trading, with buyers eyeing a record high of $2,790, with the precious metal firmly above the psychological $2,650 mark. At the time of writing, XAU/SD is trading at $2,755, rebounding from its daily low of $2,741.
Non-yielding metals extended their gains as U.S. President Donald Trump's trade comments spread from Mexico, Canada and China to the euro zone. As a result, traders bought bullion that rose to a 2025 high of $2,763 amid growing uncertainty about the outcome of the “trade war.”
The US dollar index (DXY), which measures the dollar's performance against a basket of six peer currencies and is typically inversely correlated to gold, rose 0.08% to 108.16.
A lack of economic data in the U.S. keeps traders distracted by geopolitical developments with President Trump in the headlines.
President Trump says in a truthful report that he has no intention of harming Russia and calls on President Vladimir Putin to end the war quickly, saying that if he doesn't, he will impose taxes on Russian goods imported into Russia. , warned that tariffs and sanctions would have to be imposed. us.
The yield on the US 10-year Treasury note rose slightly during the day, limiting the rise in bullion prices.
In the Middle East, a ceasefire agreement between Israel and Hamas has been scrapped after Israel launched a drone attack in the Hasbaya area of southern Lebanon, Lebanese media reported, citing Israeli journalist Kai.
This week's U.S. economic data includes new jobless claims, S&P Global PMI, and housing data.
Daily Digest Market Trends: Gold prices soar on the back of high yields in the US
- A one basis point increase in real yields increases the price of gold. Measured by the yield on 10-year Treasury Inflation-Protected Securities (TIPS), it's 2.18%.
- President Trump confirmed that universal tariffs on all imports into the United States are also being considered and will be introduced at a later stage, Reuters reported.
- “(Trump) may not have been as hawkish as feared on tariffs, but that's helping,” said Tai Wong, an independent metals trader quoted by Reuters. “A cut/lower rate is considered to indicate a possible decline in inflation, which could lead to further rate cuts.”
- Market participants are pricing in a roughly even chance that the Fed will cut rates twice by the end of 2025, with the first rate cut coming in June.
XAU/USD Technical Outlook: Gold Prices Above $2,750, Bullish All-Time High
Gold prices are expected to challenge a record high of $2,790 amid continued uncertainty over U.S. trade policy. The daily chart suggests that XAU/USD could reach the $2,800 level sooner rather than later. A decisive break in the latter would expose the psychological price levels of $2,850 and $2,900.
On the downside, if the bears push the bullion price below $2,750, the 50-day and 100-day simple moving averages (SMAs) will emerge as support levels at $2,648 and $2,647, respectively. Above this, the next 200-day SMA is $2,515.
Gold FAQ
Gold has played an important role in human history as it has been widely used as a store of value and a medium of exchange. Today, apart from their brilliance and use as jewellery, precious metals are widely seen as safe assets, meaning they are considered a good investment in turbulent times. Gold is also widely seen as a hedge against inflation and currency depreciation, as it is not dependent on any particular issuer or government.
Central banks are the largest holders of gold. With the aim of supporting their currencies in times of turmoil, central banks tend to purchase gold to diversify foreign exchange reserves and improve perceptions of economic and currency strength. High gold reserves can be a source of confidence in a country's solvency. Central banks added 1,136 tonnes of gold worth about $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest annual purchase amount since records began. Central banks in emerging countries such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold has an inverse relationship with the US dollar and US Treasuries, which are major reserve and safe haven assets. Gold tends to rise when the dollar falls, allowing investors and central banks to diversify their assets during times of turmoil. Gold is also inversely correlated with risk assets. Rising stock markets tend to push gold prices down, while declines in riskier markets tend to favor the precious metal.
Prices may vary depending on various factors. Geopolitical instability and fears of a deep recession can cause the price of gold to quickly rise from its safe-haven status. Gold, a non-yielding asset, tends to rise when interest rates fall, but rising costs usually put pressure on the yellow metal. Still, most moves will depend on how the US dollar (USD) behaves, as the asset is priced in dollars (XAU/USD). A strong dollar tends to suppress gold prices, while a weak dollar can push gold prices up.