Gold Prices Surge Past $2,855 Amid Escalating US-China Trade Tensions

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Gold prices soared to a record high of $2,855.43 on Wednesday, fueled by rising fears of an intensifying trade conflict between the US and China.

The escalation began after Beijing imposed retaliatory tariffs on American imports in response to new US duties targeting Chinese goods. This tit-for-tat strategy has spooked investors, pushing them towards the safety of gold.

US President Donald Trump’s dismissive stance on initiating dialogue with Chinese President Xi Jinping further exacerbated market anxiety. Additionally, China signaled potential sanctions against major US companies, including tech giants like Google, escalating tensions beyond trade into the corporate sphere. Ilya Spivak, head of global macro at Tastylive, highlighted that if tensions persist, “China may be more encouraged to keep buying gold for reserves,” with the $3,000 mark becoming a key target.

 

XAU/USD

Inflation Risks Add Fuel to Gold’s Rally

Beyond geopolitical tensions, inflation fears are also driving gold’s upward trajectory. The Trump administration’s aggressive tariff policies are seen as potential catalysts for rising prices, with three Federal Reserve officials warning of associated inflation risks. One Fed member suggested that the uncertainty over future price stability might slow the pace of interest rate cuts.

While gold is traditionally viewed as an inflation hedge, higher interest rates typically dampen its appeal since they increase the opportunity cost of holding non-yielding assets. This delicate balance has traders closely monitoring upcoming economic data, including the ADP employment report and Friday’s non-farm payrolls, for additional clues about the US economy’s health.

Gold (XAU/USD) Technical Outlook: Key Levels to Watch

Gold (XAU/USD) remains firmly in bullish territory, trading at $2,855.43 within an ascending channel. Immediate resistance is seen at $2,871.23, with potential hurdles at $2,884.45 and $2,899.55. A breakout above these levels could pave the way for a move towards the psychological $3,000 mark.

GOLD Price Chart - Source: Tradingview
GOLD Price Chart – Source: Tradingview

Support levels are anchored at $2,845.11, followed by $2,825.59 and $2,809.34—the latter aligning with the 50-period EMA, reinforcing bullish momentum. Technical indicators suggest possible short-term consolidation due to overbought conditions, but the prevailing trend remains upward unless gold dips below $2,825.

Key Takeaways:

  • Gold trades above $2,855, driven by US-China trade tensions.

  • Inflation risks and Fed policies add to bullish momentum.

  • Key resistance at $2,884.45; support holds at $2,825.59.

Investors should stay alert for potential breakouts, with $3,000 now in sight if current trends persist.

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ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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