Gold is on the brink of reaching a new all-time high, with expectations mounting just before the weekend. As economic dynamics unfold, including President Trump's recent announcement of tariffs on certain trading partners, the precious metal is set to test its previous peak of $2,942. The most actively traded contract for April is currently above $2,960, signaling a bullish sentiment in the market.
The bullish momentum in gold is further fueled by on-chain data, which highlights a surge in trading volume. BNB trading volume has climbed to 5.13 billion, with the long-to-short ratio marking its highest level in over a month. These indicators support a positive outlook for gold, which continues to rally amid a weakening US Dollar. A declining Greenback, exacerbated by the anticipation of Trump's tariffs, tends to bolster gold prices as traders brace for significant developments in the EU and US economic calendars.
Gold's rally is also supported by the broader economic policies of the Trump administration, which are beginning to take shape. The imposition of reciprocal tariffs by President Trump, although not immediately effective, is causing fluctuations in currency markets. These changes have led to a weaker US Dollar Index (DXY), providing an additional tailwind for gold's ascent.
Retail sales expectations further emphasize the shifting economic landscape. Analysts predict a 0.1% decline compared to December's 0.4% increase, adding another layer of complexity to market predictions. As traders navigate these changes, bullion futures on Comex are trading at a significant premium to spot prices.
Central banks play a pivotal role in this scenario as they remain the largest holders of gold. In 2022, central banks added 1,136 tonnes of gold worth approximately $70 billion to their reserves, according to the World Gold Council. This substantial accumulation underscores the strategic importance of gold in global financial systems.
While gold's journey to new heights appears promising, it is important to note that neither the author nor FXStreet are registered investment advisors. The information provided herein is not intended as investment advice but rather as an analysis of current market trends and economic factors.