Gold rallies on US-China trade conflict, eyes $4,200 breakout target

Gold (XAUUSD) began the week with a sharp rally as trade tensions between the US and China intensified. Specifically, new U.S. tariffs and tech export restrictions triggered sharp market volatility, driving investors toward gold as a safe-haven. In response, China’s retaliatory measures, including rare earth restrictions, further deepened risk aversion. President Trump’s measured response brought temporary relief to markets. However, gold stayed firm on macro risks and Fed easing bets. Overall, these evolving factors continue to influence near-term moves, while the broader uptrend remains firmly intact.

Gold surges on US-China trade tensions as focus shifts to CPI and Fed policy

Gold opened the week with a strong upside move, reacting sharply to the re-escalation of the US-China trade conflict. The announcement of 100% tariffs on Chinese imports and tighter controls on tech exports sparked fear across global markets. In response, China restricted rare earth exports and banned foreign mining engagements. These measures fueled immediate demand for gold, as investors sought protection against rising geopolitical risks.

However, gold maintained its upward momentum even after President Trump adopted a more measured response, suggesting a possible path toward resolution. His softened stance, along with Vance’s remarks signalling a willingness to negotiate, brought some relief to the markets. Despite a renewed interest in risk assets, gold maintained strength on persistent macro headwinds and ongoing safe-haven demand.

Meanwhile, the weakening US Dollar and the upcoming CPI report on October 24 continue to support the bullish outlook. Investors remain focused on whether the current surge will hold or reverse, depending on new policy developments. Despite the short-term fluctuations, gold remains supported by broader macro uncertainty and growing expectations of Fed easing.

Gold clears key resistance and rallies toward $4.200 within ascending channel

The gold chart below shows a decisive breakout from a long-term pivot near the $2,075 level. After several failed attempts in past years, Gold finally cleared this zone in early 2024, confirming a significant structural shift. The breakout marked the start of a sustained move higher, signalling renewed bullish momentum and investor confidence.

Following the breakout, price action entered a well-defined ascending channel that has guided gold’s rally throughout 2024 and 2025. Price has consistently respected both the upper and lower boundaries of this formation. Within this broader uptrend, a symmetrical triangle emerged in mid-2025. The pattern broke higher, triggering a strong rally as gold cleared the $3,500 level and moved closer to the $4,200 target.

Importantly, the breakout followed several failed attempts to clear the upper boundary of the channel, highlighted by red arrows. Each rejection led to brief consolidations, followed by renewed strength. Gold is once again testing this upper boundary. A decisive breakout could trigger a vertical move beyond $4,200, while a pullback may offer a buying opportunity near mid-channel support. The overall setup remains firmly bullish, backed by clear pattern breakouts and sustained upward momentum.

Gold outlook: Momentum builds on trade tensions and Fed policy shift

Gold remains well-supported as US-China trade tensions, macro uncertainty, and a weakening Dollar continue to drive safe-haven demand. The recent escalation in tariffs and export controls triggered strong buying interest, while the broader uptrend remains intact. Technically, gold has broken out of key resistance and continues to trade within a rising channel, with momentum building toward the $4,200 target. As markets await the October 24 CPI report and further policy signals, both geopolitical risks and Fed expectations will shape the next move.

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