GOLD Analysis
Gold Hovers Near 4-Week Highs Amid Geopolitical Tensions and Tariff Fears
Highlights
- Gold rallies on safe-haven demand after Trump tariff threats and elevated geopolitical tensions with China and Russia.
- Markets await key economic data from both Eurozone and US, with inflation and job numbers likely to impact Fed rate outlook.
- Buy on drop strategy recommended near $3,335, targeting $3,380, amid pivotal zone support and fundamental support.
Overview:
Gold prices traded just under $3,380, maintaining proximity to their highest levels in nearly four weeks, supported by rising safe-haven demand in response to renewed geopolitical and trade tensions. After a sharp 2.8% rally on Monday, marking the strongest single-day gain since early May, gold has remained well-bid due to multiple global risk factors.
The recent surge was primarily driven by President Trump’s threat to double tariffs on steel and aluminum, sparking a new round of trade friction with China. Beijing refuted claims of violating the trade agreement, but the exchange has triggered investor anxiety and added to global market volatility. Investors are now eyeing a possible call between Trump and Chinese President Xi Jinping this week, which could either ease or escalate tensions.
In parallel, geopolitical risks remain elevated following unsuccessful peace negotiations between Russia and Ukraine, while ongoing military actions have continued to threaten regional stability. This adds another layer of uncertainty, prompting global investors to rotate capital into gold as a hedge.
From a macroeconomic perspective, the market is also preparing for high-impact data, including Spanish Unemployment Change, Eurozone CPI Flash Estimates, and US JOLTS Job Openings, all of which could influence monetary policy expectations. Recent data have provided mixed signals on inflation and employment, keeping traders cautious ahead of upcoming central bank meetings.
Technically, gold faces resistance at $3,400, a level that coincides with the top of its recent trading channel. A clear breakout above this zone could open the door to further gains toward $3,425. However, immediate downside support is seen at $3,340, and any move below this level may signal short-term weakness, potentially drawing prices down toward $3,310.
Given the current CMP at $3,261, a Buy on dips strategy near $3,335 appears prudent, targeting $3,380/3410, with a protective stop loss below $3,310.