Gold Price Forecast: XAU/USD climbs above $3,350 as Trump rekindles trade tensions

Gold price drifts higher to near $3,365 in Monday’s early Asian session.
Trump's announcement of new tariffs on the EU and broader tariff threats against other trading partners lifted demand for Gold.
Fed’s Goolsbee said the latest tariff threats could delay rate cuts.

Lallalit Srijandorn FXStreet

The Gold price (XAU/USD) extends its upside to around $3,365 during the early Asian session on Monday. The precious metal edges higher as traders rushed toward the traditional safe-haven assets after US President Donald Trump widened the global trade war with a fresh wave of tariffs.

On Saturday, Trump said that the United States (US) will impose a 30% tariff on goods from the European Union (EU) and Mexico that will take effect on August 1. Trump also announced a 35% duty on Canadian imports and proposed a blanket tariff rate of 15%-20% on other trading partners last week, along with a 50% tariff on copper imports. Concerns over the impact of Trump's latest tariffs boost the yellow metal as investors seek shelter from trade tensions.

Additionally, the persistent geopolitical tensions in the Middle East might contribute to the Gold’s upside. Reuters reported that at least eight Palestinians were killed and more than a dozen were wounded while collecting water in central Gaza on Sunday. The Israeli military said the missile had been intended to hit an Islamic Jihad militant in the area but that a malfunction had caused it to fall "dozens of metres from the target”. Steve Witkoff, Trump's Middle East envoy, stated on Sunday that he was "hopeful" about the Gaza ceasefire discussions that were taking place in Qatar.

On the other hand, the cautious stance of the US Federal Reserve (Fed) might cap the upside for the precious metal. The US central bank is widely anticipated to hold interest rates steady as it waits to see the impact of tariffs on price pressures. Chicago Fed President Austan Goolsbee said that fresh tariffs unveiled by Trump have further muddied the inflation outlook, making it more difficult for him to support the rate cuts that the President has pressed for.

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

Author

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

AUD/USD drops toward 0.6900 amid USD uptick, ahead of US NFP

AUD/USD meets fresh supply and drifts toward 0.6900 in the Asian session on Friday, near its lowest level since early July. The US Dollar regains traction near 17-month highs as oil-driven inflationary concerns counter reduced bets on an October Fed rate hike and the overnight pullback in US bond yields, weighing on the pair. Focus is now on the US jobs data.

USD/JPY holds steady near 158.00 after hot Tokyo CPI; US NFP awaited

USD/JPY consolidates near 158.00, the top end of its weekly range in the Asian session on Friday, moving little after hotter-than-expected Tokyo CPI, which backs the case for more BoJ rate hikes. Meanwhile, the US Dollar retains a bullish undertone near a one-and-a-half-year top amid oil-driven inflation fears and geopolitical uncertainties, supporting the pair ahead of US Nonfarm Payrolls.

Gold returns to the red and tests $4,150, with eyes on US NFP

Gold edges lower in a multi-day-old range near $4,150 in the Asian session on Friday as traders await the US NFP report for more cues about the Fed's policy path. The outlook will drive the US Dollar and the non-yielding bullion. Meanwhile, oil-driven inflation fears offset the overnight pullback in US bond yields, helping the USD to stand firm near a one-and-a-half-year high amid the US-Iran standoff.

WTI holds steady near $92.00 as US weighs sending more troops to Middle East

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $91.75 during the early Asian trading hours on Friday. WTI flatlines after a two-day gain as the United States (US) mulled sending another aircraft carrier group to the Middle East.

Why speculators slashed Yen longs by the most since August — and what that signals about risk

For much of the past month, the Japanese Yen (JPY) had become one of the market's preferred defensive trades. Hedge funds accumulated more than 170K net long contracts over four weeks as investors positioned for tighter Bank of Japan (BoJ) policy, persistent geopolitical uncertainty and a more cautious outlook for global growth.

Markets are pricing a Fed pause. The jobs data says the hike is still coming

The market has rapidly changed its mind about the Federal Reserve (Fed). Only a week ago, investors saw an October interest-rate hike as the most likely outcome. However, softer inflation and cautious comments from policymakers have since turned a pause into the dominant scenario. Yet beneath that dramatic repricing, the US economy is sending a considerably less dovish message.