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Last week, XAU/USD settled at $2861.25, up $63.31 or +2.26%.
Technically, the main trend is up. A trade through $2886.86 will signal a resumption of the uptrend. The nearest support is the former top at $2790.17. While we don’t expect a change in trend, the market is at risk for a shift in momentum or a near-term correction.
Tariff Battles Reignite as China Hits Back
Gold’s latest leg higher was fueled by renewed U.S.-China trade tensions. President Trump imposed fresh tariffs on Chinese goods while granting a temporary reprieve to Mexico and Canada. In response, Beijing introduced retaliatory duties, including a 15% tariff on U.S. liquefied natural gas.
These trade disruptions have fueled inflation concerns, as higher import costs threaten to keep consumer prices elevated. With the Fed already cautious on rate cuts, prolonged tariff battles could delay policy easing, further supporting gold’s appeal as an inflation hedge.
Fed Stands Firm as Inflation Risks Rise
The Federal Reserve held its benchmark rate at 4.25%-4.50% in its most recent meeting, emphasizing the need for sustained progress on inflation before considering cuts. Several Fed officials warned that tariff-driven price pressures could keep policy tighter for longer than markets expect.
Bond markets reflected this uncertainty, with Treasury yields holding firm. The 10-year yield edged higher, signaling investor skepticism over near-term rate cuts. Meanwhile, the U.S. dollar remained resilient, limiting gold’s upside but failing to derail the broader uptrend.
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