GOLD Analysis
Afternoon: Gold Tops $3,395 on Dollar Weakness and Safe‑Haven Flows Amid Trade Probe Uncertainty
Highlights:
- U.S. dollar weakness—driven by Trump’s Powell criticisms—and renewed safe‑haven buying propelled gold above $3,380/oz.
- Trade‑probe uncertainties on semiconductors and pharmaceuticals heightened demand for gold as a hedge against slower global growth.
Overview:
Gold surged by over 2% to breach the $3,395 per ounce mark on Friday, setting a fresh record high. A pronounced weakening of the U.S. dollar—driven by President Trump’s public rebukes of Fed Chair Jerome Powell and speculation over Powell’s tenure—has amplified bullion’s safe‑haven appeal. Investors have flocked to gold as a hedge against potential market dislocation, given that a softer dollar makes dollar‑priced commodities cheaper for overseas buyers.
Compounding safe‑haven demand are renewed trade policy uncertainties. Last week, the Trump administration ordered a probe into potential tariffs on all key U.S. resource imports, notably semiconductors and pharmaceuticals. This escalation in trade scrutiny against major trading partners, particularly China, has stoked fears of slower global growth and further price volatility—factors that traditionally underpin gold’s role as a portfolio diversifier.
Meanwhile, the European Central Bank’s recent interest‑rate cut has heightened gold’s attractiveness in a low‑yield environment. Lower policy rates in major economies reduce the opportunity cost of holding non‑interest‑bearing assets like gold, reinforcing its upside momentum.
Looking ahead, market participants will parse comments from FOMC member Austan Goolsbee and the U.S. CB Leading Index m/m for fresh clues on Fed policy and economic momentum. Amid high volatility and persistent geopolitical risks, disciplined entries on pullbacks are recommended to capture further upside in gold.
Trading Strategy
- Given heightened volatility and extreme RSI readings, exercise caution and avoid chasing highs.
- On the technical front, spot gold is finding near‑term support around $3,350, with immediate resistance at $3,410. In India’s MCX market, support and resistance lie at ₹94,800 and ₹96,000, respectively. The prevailing strategy is to buy on dips around $3,365-70, targeting $3,435 with a prudent stop‑loss placed below $3,320.