Gold prices surged over 1% on Tuesday, reaching $2,933, as safe-haven demand was fueled by uncertainty surrounding controversial trade policies proposed by US President Donald Trump. The yellow metal bounced off daily lows of $2,892, driven by heightened concerns over global trade disruptions, particularly following Trump’s imposition of tariffs on steel and aluminum imports, as well as the potential for reciprocal duties. This has kept gold prices poised to challenge their record highs, which reached $2,942 on February 11.
Goldman Sachs Raises XAU/USD Forecast
Goldman Sachs has revised its year-end price target for gold to $3,100, citing “structurally higher” central bank demand that could add 9% to the price of the non-yielding metal. The investment bank highlighted increased global central bank buying, which supported a surge in gold prices following Trump’s victory on November 6. Since then, gold has rallied over 15.90% due to both safe-haven demand and global central bank purchases, with the World Gold Council reporting that central banks bought more than 333 tonnes of gold in 2023, a 54% year-on-year increase.
Fed’s Inflation Concerns Weigh on Market Sentiment
While gold remains supported by geopolitical and trade uncertainties, the Federal Reserve’s ongoing concern over inflation could influence market dynamics. San Francisco Fed President Mary Daly recently expressed doubts about the Fed’s progress on inflation, noting that “Policy needs to remain restrictive until… we are really continuing to make progress on inflation.” These remarks have added to market jitters, with traders awaiting the release of key data including January’s FOMC monetary policy decision, housing data, Initial Jobless Claims, and S&P Global Flash PMIs.
Gold Technical Outlook: Eyes on Record Highs
Gold’s upward trend remains intact, with buyers now focusing on breaking through the all-time high of $2,942. Key resistance levels are situated at $2,950 and the psychological $3,000 mark. If these levels are surpassed, Goldman Sachs’ $3,100 target for gold by year-end could be within reach.
On the bearish side, for gold prices to reverse their bullish momentum, sellers would need to push prices below $2,900. If that happens, support levels would be tested at $2,877 (February 14 swing low) and $2,864 (February 12 low). A deeper pullback could send gold towards the October 31 swing high at $2,790.
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