Gold prices (XAU/USD) regained momentum on Wednesday, reversing early losses around the $2,924 level and inching closer to record highs as trade war fears and expectations of further Federal Reserve rate cuts bolstered demand for safe-haven assets. Concerns over US President Donald Trump’s potential tariff plans heightened fears of global trade tensions, keeping investors defensive and supporting gold. Simultaneously, bets on more Fed rate cuts weakened the US Dollar (USD), providing an additional tailwind for gold prices.
However, traders remain cautious, holding back from fresh bullish positions ahead of the Federal Open Market Committee (FOMC) minutes release, which is expected to offer insights on the Fed’s future interest rate path. Optimism surrounding delayed tariff implementation and ongoing peace talks for the Russia-Ukraine war could also act as potential headwinds for gold’s upward movement. Nonetheless, the overall sentiment indicates that gold’s upward trajectory remains intact amid ongoing economic uncertainties.
Gold prices have also found support from recent weak US Retail Sales data and mixed inflation signals, which heightened expectations for a Fed rate cut of up to 40 basis points later in 2025. San Francisco Fed President Mary Daly reinforced this sentiment by urging caution on rate adjustments until more progress towards the Fed’s 2% inflation target is evident.
From a technical perspective, the current price movement appears to be a bullish consolidation after a recent surge to record highs. While the daily Relative Strength Index (RSI) remains near overbought levels, indicating possible consolidation, the broader setup still favors bullish momentum. Support remains around the $2,900-$2,876 range, with a potential downside target near $2,860 if these levels are breached. On the upside, resistance remains at the $2,940-$2,942 level, and a breakout above this threshold could signal further bullish momentum and continuation of the two-month uptrend.
