- The gold price analysis points North, with safe-haven demand rising.
- Trump increased the tariff on imports from China to 145%.Â
- US inflation data revealed cooler-than-expected price pressures.
The gold price analysis points North, with safe-haven demand rising amid the escalating trade war between China and the US. At the same time, downbeat US inflation figures increased Fed rate cut expectations, further boosting the yellow metal.
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On Friday, US President Trump made yet another tariff hike on imports from China to 145%. Meanwhile, China responded immediately by hiking tariffs on US imports to 125%. The ongoing conflict between the two largest economies in the world has caused immense turmoil in most markets. Risky assets like equities have suffered the most, with traders rushing to safe-haven assets. Meanwhile, gold has rallied to new highs, with its appeal rising amid economic uncertainty.Â
Experts are predicting a likely US recession due to the raging trade war. At the same time, Trump’s on-and-off tariffs have weighed on investor confidence in the US. As a result, most are dumping US assets, putting pressure on the dollar. A weak dollar makes gold cheaper for foreign buyers, increasing demand.
Furthermore, US inflation data revealed cooler-than-expected price pressures, boosting Fed rate cut expectations. The CPI increased by 2.4% annually, compared to forecasts of 2.5%. Lower borrowing costs increase the appeal of non-yielding gold.Â
Gold key events today
- US core PPI m/m
- US PPI m/m
- Preliminary UoM consumer sentiment
- Preliminary UoM inflation expectations
Gold technical price analysis: Bulls challenge the 1.272 Fib extension level
On the technical side, gold has broken above a solid resistance to make a new high. The price trades well above the 30-SMA, and the RSI is overbought, suggesting a strong bullish bias. Bulls took charge when the previous decline failed to continue below the 2960.28 support level.Â
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Bullish momentum surged enough to break past the 30-SMA. Moreover, it continued until the price reached a higher high. However, the rally has been steep, with no pullbacks for bulls to rest. Therefore, there is a high chance the price might soon retreat to allow the SMA to catch up.Â
Moreover, bulls are approaching a strong resistance zone, comprising the 1.272 Fib extension level and the 3240.65 resistance level. At the same time, the RSI has made a bearish divergence, which could lead to a pullback. Nevertheless, the bullish bias is strong, and gold might continue making new highs.
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