Gold Price Forecast: XAU/USD unstoppable record rally continues

Valeria Bednarik FXStreet

XAU/USD Current price: $2,875.41

United States data showed services output grew at a slower-than-anticipated pace in January.
Financial markets slowly moved away from panic selling, concerns remain in the background.
XAU/USD is bullish while overbought, speculative interest aims for $2,900.

Spot Gold’s rally to record highs continued on Wednesday, with XAU/USD trading as high as $2,882.34 during American trading hours. As it has been happening these days, demand for safety prevails amid mounting concerns related to United States (US) President Donald Trump’s tariffs. At the same time, the US Dollar (USD) has lost its attractiveness, with stock markets recovering and investors digesting the latest US data.

The latest US macroeconomic figures showed a solid labor market and softer-than-anticipated economic progress. On the one hand, the ADP Employment Change report showed that the private sector added 183,000 new jobs in January, better than the 150,000 anticipated by market players and above the 122,000 gained in December.

On the other hand, the January ISM Services Purchasing Managers’ Index (PMI) rose by 52.8, below the 54 posted in December and the expected 54.3. Other details of the report showed that the Prices Paid Index, the inflation component, dropped to 60.4 from 64.4, while the Employment Index edged higher to 52.3 from 51.3.

Meanwhile, Wall Street struggles to extend its recent recovery. Most Asian and European indexes closed in the green, but among US indexes, only the Dow Jones Industrial Average (DJIA) is up.

XAU/USD short-term technical outlook

From a technical point of view, the daily chart for XAU/USD shows that the bullish momentum prevails despite overbought conditions, as technical indicators keep aiming north despite developing at extreme levels. At the same time, the pair advanced further above bullish moving averages, with the 20 Simple Moving Average (SMA) heading sharply higher at around $2,750.

In the near term, and according to the 4-hour chart, the risk skews to the upside. Technical indicators have resumed their advances within overbought levels and after a limited retracement, suggesting buyers are still willing to add on dips. Finally, XAU/USD develops far above all bullish moving averages, with the shorter 20 SMA at around $2,825.

Support levels: 2,857.80 2,845.30 2,829.10

Resistance levels: 2,883.00 2,900.00 2,915.00

Tariffs FAQs

What are tariffs?

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

What is the difference between taxes and tariffs?

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

Are tariffs good or bad?

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

What is US President Donald Trump’s tariff plan?

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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