Gold price forecast: Trade tensions and geopolitical risks drive demand

Gold prices are rising due to growing concerns over trade tariffs and geopolitical instability. Investors seek safe-haven assets as US President Donald Trump's tariffs on Mexico, Canada, and China take effect. The risk of a global trade war adds to market uncertainty, increasing demand for gold. Additionally, retaliatory tariffs from Canada and China fuel fears of economic disruption, prompting investors to hedge against potential downturns with gold.

Despite gold's appeal, the stronger US dollar limits its upside potential. Expectations that tariffs will push inflation higher might lead the Federal Reserve to maintain elevated interest rates. This supports the dollar and reduces the attractiveness of non-yielding assets like gold. Investors remain cautious, awaiting key economic data such as the US Nonfarm Payrolls report, which could provide further direction for the gold market.

Economic indicators also influence gold prices amid trade tensions. The ISM Manufacturing PMI slowed growth while price pressures intensified due to import duties. Concerns over consumer spending and economic slowdown add to gold's safe-haven appeal. Additionally, geopolitical instability, including the US pausing military aid to Ukraine, heightens market uncertainty. As a result, gold remains supported, though further gains depend on upcoming economic developments.

Gold technical analysis: Uptrend intact but facing resistance

The chart shows that gold is trading within a well-defined upward channel. The price recently faced resistance near the upper boundary of the black trendline, marked by a red circle, and has since pulled back. However, it found support near the channel's midline, suggesting that buyers remain active at lower levels. This pullback aligns with a healthy correction within a broader bullish trend, and unless the price breaks below the channel's lower boundary, the uptrend remains intact.

The long-term trend remains bullish, as indicated by higher highs and higher lows. If gold regains strength and breaks above the recent resistance near $3,000, the next target could be the upper blue trendline. However, if selling pressure increases and gold falls below the lower black trendline, it could signal a deeper correction toward the lower boundary of the broader blue channel. Traders should monitor price action around key support, resistance levels, and macroeconomic factors that could influence gold's movement.

Bottom line

Gold remains in a strong uptrend despite facing resistance near $3,000. Trade tensions and geopolitical risks support its safe-haven appeal, but a strong US dollar limits further gains. The price pulled back from resistance but found support within its rising channel, keeping the bullish trend intact. A break above $3,000 could trigger further gains, while a drop below key support may lead to a deeper correction. Traders should watch key economic data and global developments for the next directional move.

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