Gold Price Outlook: Can XAU/USD Hold $2,870 Amid Tariff Uncertainty?
Gold prices retreated slightly on Wednesday as traders took profits after the recent surge.
Despite this dip, XAU/USD remains above $2,870, holding within its upward channel as global economic concerns continue to drive demand. The pullback follows U.S. President Donald Trump’s decision to impose a 25% tariff on steel and aluminum imports, a move that has heightened fears of a trade war.
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With investors closely watching Wednesday’s U.S. inflation report, the Federal Reserve’s stance on interest rates could further impact gold’s trajectory. Fed Chair Jerome Powell signaled no immediate rate cuts, emphasizing that inflation remains elevated. Given the uncertainty surrounding fiscal policies, gold’s role as a safe-haven asset is likely to persist.
Gold Faces Key Support at $2,870 as Bulls Defend Gains
Gold’s recent rally stalled as traders locked in profits, causing XAU/USD to dip 0.22% to $2,886. However, the price remains within its ascending channel, with $2,870 serving as a crucial support level.
The 50-day EMA at $2,856 reinforces this zone, keeping the uptrend intact. A break below this level could trigger a move towards $2,834 and potentially $2,800, increasing downside risk.
Immediate resistance sits at $2,900, while stronger resistance levels lie at $2,916 and $2,936.
If gold regains momentum and breaks above $2,916, it could test $2,955, marking another high in its bullish trajectory.
Key Levels to Watch
Support: $2,870, $2,856, $2,834
Resistance: $2,900, $2,916, $2,936
Trend Bias: Bullish above $2,870; bearish below $2,856
Fed Policy and Trade War Fears Impact Gold’s Future
The Federal Reserve’s rate policy remains a key driver for gold prices. With inflation data expected Wednesday, traders will be looking for cues on potential rate cuts. A higher-than-expected inflation print could delay Fed rate cuts, limiting gold’s short-term upside.
Powell’s hawkish stance on inflation could put pressure on non-yielding assets like gold, making a further rally dependent on geopolitical and economic uncertainties.
With Trump’s tariffs potentially fueling inflation, expectations of prolonged rate pauses may keep gold volatile in the near term.
Gold’s safe-haven appeal remains strong, particularly amid trade tensions and potential economic slowdowns. Investors should closely monitor economic data and central bank signals, as any deviation from expectations could drive sharp price moves.
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