Gold prices are climbing as clouds of uncertainty around U.S. trade policy persist in weighing on the markets. The immediate barrier for gold buyers is at an all-time high of $3,246, one that they are determined to break through. Clarifications made over the past few weeks by former President Donald Trump on the gold tariffs have only added to this firecracker of interest. Notably, gold products will remain subject to the current 20% tariffs on Chinese imports. The extremely high 145% tariffs have been ruled out, bringing a sigh of relief to investors and others likely affected.
The stage of unpredictable trade policies has made it extremely difficult for gold buyers. Gold prices are being impacted right now by continued volatility in the U.S. bond market. Despite this, there are recent indications of stabilization following a chaotic week. Similarly, benchmark 10-year U.S. Treasury bond yields fell an average of nearly 10 basis points. At the same time, inflation and recession concerns are pushing investors toward gold.
Market Reactions to Trade Policy Uncertainty
Trump’s erratic… Gold buyers more and more swayed by unpredictable nature of Trump’s tariff policies. The markets haven’t bitten, and for good reason — because investors are deeply concerned that all of these policies will undermine our long-term global economic prospects. Trump’s pattern of reversing his own tariff announcements is considered by analysts another major source of uncertainty. This inconsistency has investors wondering how safe their investments are.
Inflows into China’s physically backed gold exchange-traded funds (ETFs) have been on fire this month. This wave is massively bullish for gold’s price. As the World Gold Council (WGC) recently highlighted, we’re seeing unprecedented inflows into gold. This increase is clear evidence that investors are flocking to gold as a safe-haven asset as geopolitical tensions have begun to rise.
Considering all of these developments, the usual gold price negative sentiment is alive and well. The daily chart indicates the 14-day Relative Strength Index (RSI) has just dipped below the overbought territory. Currently, that number hovers around 69. That means room for more near-term upside, as demand stays strong with an upbeat outlook.
Economic Indicators Influence Gold Prices
Combined with recent hawkish comments from several Fed, Treasury and White House leaders, these moves have weighed on market sentiment. Atlanta Fed Bank President Raphael Bostic, also a FOMC member, urged a wait-and-see approach until we know more about what’s happening with the economy. The markets mostly brushed off his statements. This reflects a larger sense of urgency that has overtaken investors who are ready to deploy capital while economic factors undoubtedly shift under their feet.
Meanwhile, Fed Governor Christopher Waller has indicated that the uncertainty stemming from the Trump administration’s tariff policies could prompt the Federal Reserve to consider rate cuts. He stressed that inflation fears should not prevent these moves if the risks of US recession become more acute. This dynamic makes it even more difficult for investors to make informed decisions as they consider their opportunities in an increasingly shifting landscape.
“will announce the tariff rate for semiconductors over the next week.” – US President Donald Trump
As traders look toward upcoming developments regarding tariffs and economic policy, they remain acutely aware that any headlines from Trump could significantly impact gold prices.
Technical Outlook for Gold
Gold is setting up very nicely to break out higher after recent price action. Bullish technical set-ups on the daily chart add credence to this bullish view. Gold buyers are already plotting their next moves. Specifically, they are affected by parallel domestic and international developments in trade policy as well as key economic indicators.
Recent stabilization in U.S. Treasury yields have provided investors with some much needed exhale room. Before that, they fought a punishing short squeeze that drove up yields by almost 50bps. Should yields retract, gold, a conventional safe-haven asset would allure investors seeking shelter during times of uncertainty.