Gold Price Forecast: XAU/USD stands tall amid renewed US-China trade drama
- Gold refreshes record highs early Monday, extending the previous week’s rebound from near $3,950.
- US Dollar licks its wounds amid looming US-China tariff war, as risk rebounds firmly on TACO.
- Gold holds the rising channel on the daily chart, with the RSI pointing to more upside in the near term.
Gold is seeing a second consecutive day of gains early Monday, having managed to reclaim the key $4,000 level on Friday.
Gold looks to US-China tariff developments
Gold sets off a new week with a bang, recording a new all-time high in early trades, responding positively to fresh developments surrounding the US-China tariff war.
US President Donald Trump slapped an additional 100% tariffs on all Chinese imports and introduced strict export controls on US-made critical software starting November 1.
This came in response to China tightening its export controls on rare earths and related technologies, while barring its citizens from participating in unauthorized mining overseas.
However, buyers quickly turn cautious, fuelling a brief retreat in Gold, as they digest Trump’s TACO (Trump Always Chickens Out) button pressed on Sunday.
Risk sentiment is on a solid recovery, courtesy of Trump’s conciliatory remarks, citing that “I think we’re going to be fine with China.”
US Vice President J.D. Vance also said on Sunday that “Trump is willing to be a reasonable negotiator with China.”
Meanwhile, a positive shift in risk sentiment dents the US Dollar’s (USD) safe-haven appeal, lending support to the bright metal. The Greenback bears the brunt of the protracted US government shutdown and lingering US tariffs on China, effective from November 1.
Looking ahead, it remains to be seen if Gold continues its record-setting rally, with traders closely eyeing fresh developments on the US-China trade front and speeches from US Federal Reserve (Fed) officials, in the absence of high-impact US economic data releases.
The US Bureau of Labor Statistics (BLS) is set to publish the critical Consumer Price Index (CPI) report on Friday, October 24.
Bracing for the eighth consecutive weekly advance, Gold buyers look to resume the record-setting rally in Asian trading on Friday.
Gold price technical analysis: Daily chart
The daily chart shows that the 14-day Relative Strength Index (RSI) is off the extreme overbought zone, while trending higher 78.80, as of writing.
The leading indicator suggests that buyers could extend their control, with a retest of the $4,100 level likely. A sustained break above that will call for a test of the $4,138 – the upper boundary of the month-long rising channel.
Alternatively, Gold needs acceptance below the lower boundary of the rising channel at $3,991 on a daily candlestick closing basis to sustain the correction toward the $3,950 psychological mark.
Deeper correction could challenge the $3,895 supply zone (October 1 and 2 highs).
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
