Gold (XAU/USD) prices rose slightly, trading at around $2935 at the time of writing on Friday, and holds good papers to close this week with all-time high and strong gains. The latest rally comes after US President Donald Trump signed the executive order for-for-tat tariffs on Thursday. Although it will take weeks before the tariffs are implemented, investors are not risking anything and putting their money in the gold safe haven.
Meanwhile, gold added further support to its rally, with the US dollar and the US dollar index generally weakening. The U.S. dollar is losing ground because President Trump’s-for-tat tariffs need weeks or months before implementation. This opens the window of opportunity for negotiations and, therefore, no immediate journey to a safe haven against the backdrop of any announcement or signing of an executive order by the US president.
Gold is set to hit an all-time high before the end of the week. If this trend continues, it will be difficult to fight. However, a positive shift in geopolitics may move the needle and not justify the rise in the price of gold anymore.
Friday’s first support level is $2,919, which is the daily pivot point. From there, the S1 support stands at $2,909. At the bottom, S2 support at $2,890 should act as protection and prevent any further dips to the more important $2,790 (October 31, 2024, high).
On the positive side, the R1 resistance at $2938 is the first level to recover, followed by the R2 resistance at $2948. Should the rally continue, the large figure of $2950 will be tested for a break to the upside. Above, the psychological level of $3,000 may be next.
Gold and silver prices rise amid anticipation of economic data
Gold prices (XAU/USD) continued their winning streak, reaching an intraday high of $2,933 as investors scrambled to safe-haven assets amid mounting concerns over tariffs. The metal gained strength after former U.S. President Donald Trump announced possible-for-tat tariffs, raising fears of a global trade dispute.
The US Producer Price Index (PPI) for January rose 3.5% year-on-year, beating expectations and boosting inflationary pressures. Meanwhile, the US dollar weakened for the fourth consecutive session, making gold more attractive to foreign buyers.
However, the Fed’s cautious stance on cutting interest rates may limit further gains. Federal Reserve Chairman Jerome Powell has confirmed that interest rate adjustments will only come with clearer evidence of slowing inflation.
Silver rises as demand for safe-haven assets grows
Silver (XAG/USD) rose to $32.93, supported by a weaker dollar and lower Treasury yields. The metal rose around 5% this month, driven by growing demand for safe-haven assets and strong industrial consumption. The renewable energy sector continues to boost demand for silver, especially for the production of solar panels.
Despite the bullish momentum, silver prices may face resistance if the Fed maintains its hawkish stance. High interest rates usually weaken the attractiveness of non-returning assets such as silver.
Economic data and trade policies keep markets tense
Investors are closely watching the upcoming US retail sales report, which could affect the dollar’s trajectory. A stronger-than-expected reading could boost the US dollar, putting pressure on gold and silver prices. Meanwhile, initial jobless claims fell to 213,000, suggesting a flexible labor market that supports the Fed’s cautious approach.
Short-term outlook
Gold prices remain bullish above $2923, supported by tariff concerns and inflation data. Resistance at $2,950; watch volatility with upcoming US retail sales data.
Gold prices hit record highs amid economic concerns
Global gold prices rose to new record highs amid trade war fears, pushing domestic prices past last year’s peak.
On February 6, global spot gold prices rose more than $20 an ounce during the trading session, briefly reaching an all-time high of $2,882 an ounce. The price then retreated slightly but remained above the $2870 per ounce level.
Heng Kun Hao, Head of Market Strategy at UOB Bank Singapore, expects gold prices to remain strong, citing strong safe-haven demand amid rising geopolitical and economic risks.
“Geopolitical factors such as US-China trade tensions and shifts in global supply chains will continue to weigh on gold prices. Investors looking for safe-haven assets are increasingly turning to gold.”
Opportunities remain strong in ASX gold even as valuations rise, increasing the likelihood that international raiders will come in search of acquisitions on the ASX.
Global demand for gold has reached record highs amid growing investor concerns about potential global instability. Global demand rose 1% in 2024, reaching a record high of 4,974.5 tonnes, driven by higher investments and purchases by central banks. Gold prices also rose 27%, recording the largest annual increase since 2010, as economic uncertainty and low interest rates boosted demand, according to the World Gold Council’s 2024 Gold Demand Trends report, released on February 5.
Louise Street, senior analyst at the World Gold Council, attributed the trend to the start of interest rate cuts cycles by several central banks and rising geopolitical instability, including the US presidential election and tensions in the Middle East.
Gold Price Forecast: $3,000 Potential
Don’t ask yourself if gold can break the $3,000 per ounce barrier, ask yourself if it can surpass the $3,600 barrier. This is close to A$5,700 at the current exchange rate – and you’ll love to see that.
This is the bold appeal of leading gold fund manager Cameron Good, a stock picker at Victor Smorgon Group who believes the bullion boom still has a long way to go.
With its role as a hedge against macroeconomic uncertainty – and there’s plenty of it with Donald Trump’s feather still wet from his 400,000th executive order – Judd recommends holding 5-10% of the portfolio in the gold market.
The main emerging risk, besides the aforementioned uncertainty, is stagflation. It is worth noting that gold has increased its average price by about 30% in periods of stagflation, which means a price of around 3600 US dollars per ounce. “Most economists agree that U.S. trade tariffs increase the risk of rising inflation, rising unemployment, and shrinking economic growth this year or next.
In this environment, gold can yield more stable and possibly stronger returns than traditional stock markets. Gold remains the only global asset with low correlation to risky assets, no external or geopolitical risks, relatively low volatility, and a deep and liquid market. The performance of gold in times of uncertainty or crisis may see it paying around $3,600.”
VSG’s gold strategy, one of seven portfolio pillars, achieved a net of 13.3% in January and 32.8% over the fiscal year to date, far outpacing the Van Eck Gold Mining Fund’s return of 14.8% and the USD$ gold price gain of ~20%.
