Gold prices continue their upward trajectory, climbing over 0.90% on Wednesday as a weakening US Dollar and declining Treasury bond yields fuel demand for the safe-haven asset. The ongoing US-China trade tensions further bolster gold’s appeal, with XAU/USD trading near $2,870 and eyeing the key $2,900 mark.
Investors remain drawn to gold as US President Donald Trump’s trade policies and rhetoric add to market uncertainty. The metal, now in uncharted territory, has traders closely watching the $2,900 threshold. Meanwhile, economic data revealed resilience in the labor market, with the ADP Employment Change report showing stronger-than-expected private sector hiring in January.
However, business activity data painted a less optimistic picture. Reports from S&P Global and the Institute for Supply Management (ISM) indicated a slowdown in the services sector, raising concerns about broader economic growth.
Federal Reserve (Fed) officials have expressed uncertainty regarding the inflationary impact of tariffs. Chicago Fed President Austan Goolsbee warned against overlooking the role of tariffs in inflation dynamics, stating, “If we see inflation rising or progress stalling in 2025, the Fed will be in the difficult position of trying to figure out if the inflation is coming from overheating or if it’s coming from tariffs.”
Adding to the uncertainty, Trump delayed a planned 25% tariff hike on Mexico and Canada by 30 days but imposed a fresh 10% tariff on Chinese imports. This move has kept investors wary of potential global trade disruptions, driving continued demand for gold while weighing on the Greenback.
After setting a new all-time high of $2,882, gold is on track to challenge $2,890, with the psychological $2,900 level in sight. Despite the Relative Strength Index (RSI) signaling overbought conditions, it has yet to reach extreme levels above 80, suggesting room for further gains.
On the downside, a drop below $2,800 could see initial support at the January 27 swing low of $2,730, followed by a deeper correction toward $2,700.
Related topics:
Mitsubishi UFJ Asset Management Increases Stake in JPMorgan Chase Amid Solid Institutional Support
Can You Buy International Stocks on Fidelity?
SPDR Gold Shares ETF (GLD): A Convenient Way to Invest in Gold Without the Hassle
