Trade Tensions Fuel Gold—$3,500 in Sight?

Gold has gone off the charts, hitting a new all-time high of $3,357 this week. Geopolitical tensions, inflation fears and central bank demand are driving the rally.

President Trump’s announcement of new tariffs on Chinese mineral imports has spooked the market and sent investors to safe-haven assets. The Fed’s cautious tone on growth and inflation is adding to the gold case.

The US dollar has also weakened sharply, hitting a 3 year low, making dollar denominated gold more attractive to foreign buyers. Citi Research says gold could test $3,500 in the next 3 months driven by Chinese insurer demand and macro instability.

Central Banks and Dollar Weakness Fuel the Rally

Most of the buying has come from institutional and sovereign players. China’s central bank is buying more gold as it diversifies away from US Treasuries – a move that reflects global hedging behaviour.

With trade friction increasing and the Fed cautioning, gold is acting as a pressure valve for inflation fears and monetary policy uncertainty. Citi’s updated forecast says gold’s role as a macro hedge is far from over.

Technical Picture: Bulls in Control

On the chart:

• Price is consolidating above $3,318 just below the record high.

• $3,294 (38.2% Fib) has been a reliable support zone.

• 50 period EMA at $3,267 is rising and bullish.

• RSI is above 60 but not overbought.

Key Levels to Watch:

• Support: $3,294 (38.2% Fib), $3,267 (EMA)

• Resistance: $3,357 (recent high), then $3,400 and $3,500

This setup is higher if momentum is confirmed by volume.

Trade Setup: How to Trade the Gold Rally

For traders looking to ride this momentum a pullback to support near $3,294-$3,300 could be a good entry – but only with bullish confirmation (like a strong reversal candle and rising volume).

Trade Idea (Short-Term Long):

• Entry: Buy near $3,294-$3,300 on confirmed bullish signal

• Stop Loss: Below $3,275* Targets: $3,357 (first), $3,381 (extended)

Pro Tip: Don’t buy the rumor, wait for the confirmation. A clean close above $3,320 with volume could be a new leg higher.

Bottom Line: $3,500 in sight – but not a certainty

Gold’s macro story remains strong – a hedge against inflation, a shield against volatility and a vote of no confidence in fiat risk. $3,500 is in view but don’t underestimate short term resistance or headline driven profit taking.

Both technicals and fundamentals are aligned – for now.