Gold markets continue to attract strong buying interest, marking the fourth consecutive day of gains amid escalating trade tensions and renewed expectations of US Federal Reserve rate cuts. President Trump’s aggressive tariff measures against Canada, Mexico, and China have rattled global markets, prompting a flight to safe-haven assets like gold. Meanwhile, mixed US economic indicators and inflation concerns further complicate the outlook, creating an environment ripe for volatility. Today’s report dives into the critical technical and fundamental drivers shaping gold’s price trajectory and offers actionable insights for navigating the current market landscape.
Gold prices extended their rally as markets reacted to the escalating US trade war, triggered by President Trump’s imposition of 25% tariffs on Canada and Mexico and a 10% levy on Chinese goods. The administration claims these measures are aimed at combating illegal immigration and the drug trade, but the broader economic repercussions have sent shockwaves through financial markets. Investors have adopted a “sell everything” strategy, with the US Dollar emerging as the only winner in the short term.
Despite a modest rebound in US bond yields and slight gains in the USD, gold remains supported by inflation fears and bets on additional Fed rate cuts. The market is now closely watching the US JOLTS Job Openings report, expected to show 8 million openings in December. A weaker-than-expected report, combined with dovish commentary from Fed officials, could renew selling pressure on the USD and push gold toward record highs.
The technical outlook for gold remains bullish, but caution is warranted as the 14-day Relative Strength Index (RSI) has entered overbought territory, currently at 71. This suggests that while the uptrend is intact, a pullback may be imminent before further gains are realized.
If a correction occurs, gold could test support at $2,795, followed by the previous day’s low of $2,770. A break below these levels could expose the January 30 low of $2,754. However, the Bull Cross between the 50-day and 100-day Moving Averages indicates that the broader trend remains positive. On the upside, a sustained move above the all-time high of $2,831 is needed to challenge the $2,850 psychological barrier.
Technical Indicators:
Gold markets remain at a critical juncture as traders weigh escalating trade tensions against evolving US monetary policy expectations. While the technical indicators point to an overbought market, strong support levels and bullish moving average crossovers suggest that any pullbacks could be short-lived. A break above $2,831 would open the door to the $2,850 psychological level, while failure to hold $2,795 could trigger a deeper correction toward $2,770 and $2,754. As investors await key US economic data and further Fed commentary, gold’s role as a hedge against economic and geopolitical uncertainty remains firmly in focus.