Gold prices rose in Asian trading on Tuesday, reflecting continued safe-haven demand. Despite a rebound in the dollar in recent weeks, gold remained elevated on ongoing concerns over U.S. tariffs and interest rate uncertainty.
Political and economic uncertainty persists
The recent escalation in the conflict between Ukraine and Russia, which included a drone strike on a Russian gas station, has heightened fears of an escalation in the war. Despite optimistic comments from U.S. President Donald Trump about a possible peace treaty with Russia, the developments have weighed on global markets, supporting demand for gold.
Gold prices were unaffected by the dollar’s recovery, remaining about $40 away from last week’s high. Despite slight gains in other metals, such as platinum and silver, markets were pressured by a stronger dollar, making it difficult for other metals to rally significantly.
Trade Escalation Fears
Gold demand remained supported by ongoing concerns over an escalation in the trade dispute between the United States and the European Union. Although President Trump has indicated that new tariffs will not be imposed until next April, there are reports that the European Union is considering imposing controls on the import of some American goods. This could further complicate trade tensions between the two sides.
In addition, there have been concerns about the impact of President Trump’s imposition of 25% tariffs on steel and aluminum imports, which could have negative repercussions on the global economy, in addition to other countries taking retaliatory measures that could affect global trade. According to him, there is a rush to secure gold in the United States before the imposition of potential tariffs due to the ongoing trade tensions.
The impact of interest rates on metals markets
Gold and other metals markets are facing uncertainty over the possibility that US interest rates will remain higher for longer than expected. Federal Reserve Governor Christopher Waller said the central bank still supports keeping interest rates steady for a long time, in a move aimed at controlling inflation. The statement comes after data showed an unexpected increase in US inflation in January.
Search for Safe-Haven Assets Amid Trade War
Kyle Rodda, a financial markets analyst at Capital.com, points out that there is strong demand for gold from central banks, especially in Europe, which is suffering from a shortage of gold. The trade war between the US and China has left markets in a state of volatility. The imposition of tariffs on Mexico, Canada and European imports has also complicated the situation. While inflation has slowed, Fed Governor Michelle Bowman said the bank does not plan to cut interest rates until there are clear signals about inflation and trade risks. Goldman Sachs Forecasts Boost Gold
Economic analysis from Goldman Sachs helped boost gold expectations as the bank revised its target for gold prices by the end of 2025 to $3,100 per ounce, up from its previous forecast of $2,890 per ounce. The bank also noted that there is a structural increase in demand for gold from central banks, which continue to build their reserves to hedge against economic risks and inflation.
At the same time as these expectations, European leaders met in Paris to discuss increasing defense spending, reflecting a state of increasing geopolitical uncertainty. On the other hand, discussions about deploying peacekeeping forces in Ukraine remain stuck without clear solutions, which increases investors’ hesitation.
Gold and its performance amid global economic anxiety
The yellow metal has increased its status as a traditional hedge against inflation amid rising global economic concerns. While the Federal Reserve remains cautious about cutting interest rates, investors continue to turn to gold as a value-preserving tool away from higher-yielding assets such as stocks and bonds.
Technical Outlook for Gold
Technically, gold is currently trading at $2,911 per ounce, with strong support near $2,895. This is in line with the 50-day exponential moving average at $2,902, where buyers have successfully defended this area, suggesting that the price is holding up amid market volatility.
Resistance-wise, there is an immediate level at $2,917, which if broken could push the price to $2,940 and then $2,961. However, if gold fails to break the resistance level, it could enter a period of price consolidation.
If the price falls below the $2,895 support level, it could lead to a further decline towards $2,878, $2,865 and $2,848. However, the recent bounce from the support level indicates that the uptrend may continue, with confirmation of a decisive close above $2,917.
However, if uncertainty over US policies persists, especially regarding tariffs, Goldman Sachs expects gold to reach $3,300 per ounce by the end of 2025.
Gold prices continue to rise due to uncertainty surrounding the global economy, including trade issues and interest rate expectations. Despite the recent improvement in the dollar, gold remains strong due to increased demand from central banks in emerging markets. Given the ongoing tensions in the markets, gold is likely to continue to record significant gains in the coming years.
