Gold price continues to attract safe-haven flows amid renewed US-China trade war fears.
Fed rate cut bets undermine the USD and further lend support to the XAU/USD pair.
A slightly overbought RSI on the daily chart warrants some caution for bullish traders.
Gold price (XAU/USD) prolongs its upward trajectory through the Asian session on Wednesday and advances to a fresh all-time peak, around the $2,854 region in the last hour. Investors remain concerned about the economic fallout from US President Donald Trump's trade tariffs, which continues to underpin demand for the safe-haven bullion. Furthermore, the JOLTS data released on Tuesday pointed to slowing momentum in the US labor market and could force the Federal Reserve (Fed) to maintain its easing cycle despite sticky inflation. This turns out to be another factor that contributes to driving flows towards the non-yielding yellow metal.
Meanwhile, the prospects for further policy easing by the Fed keep the US Dollar (USD) depressed near the weekly low touched on Tuesday, which is seen lending additional support to the Gold prices. That said, Trump's decision to delay tariffs against Canada and Mexico remains supportive of the risk-on mood and could cap gains for the commodity amid overbought conditions on the daily chart. This makes it prudent to wait for a near-term consolidation or a modest pullback before placing fresh bullish bets around the XAU/USD. Traders now look to the US ADP report on private-sector employment and the US ISM Services PMI for some impetus.
Gold price uptrend remains uninterrupted as investors continue to seek refuge in safe-haven assets
China retaliated to US President Donald Trump's new duties and imposed targeted tariffs on US imports, fueling trade war fears between the world's top two economies and lifting the safe-haven Gold price to a fresh record high on Wednesday.
The Job Openings and Labor Turnover Survey (JOLTS) published by the US Bureau of Labor Statistics on Tuesday showed that the number of job openings on the last business day of December stood at 7.6 million, down from 8.09 million previous.
The data pointed to a slowdown in the job market, which could allow the Federal Reserve to cut rates further. This keeps the US Dollar bulls on the defensive near the weekly low and turns out to be another factor that benefits the XAU/USD pair.
Trump offered concessions to Canada and Mexico by delaying the 25% trade tariffs for 30 days, fueling hopes that a global trade war could be averted, though it does little to dent the bullish sentiment around the safe-haven precious metal.
Wednesday's US economic docket features the release of the ADP report on private-sector employment and ISM Services PMI. The data should influence the USD and produce short-term trading opportunities around the commodity.
The focus, however, will remain on the closely-watched US monthly employment detail – popularly known as the Nonfarm Payrolls (NFP) report on Friday. Apart from this, tariff headlines should infuse volatility in the markets.
Gold price needs to consolidate recent strong gains before extending a well-established uptrend
From a technical perspective, the Relative Strength Index (RSI) on hourly and daily charts is flashing slightly overbought conditions, warranting some caution for bullish traders. That said, the recent breakout momentum beyond the $2,800 mark suggests that the path of least resistance for the Gold price remains to the upside. This, in turn, supports prospects for an extension of the recent well-established uptrend from the December 2024 swing low.
In the meantime, any corrective slide now seems to find some support near the $2,830 area ahead of the $2,800 mark. A further decline could be seen as a buying opportunity and is more likely to remain limited near the $2,773-2,772 horizontal resistance breakpoint, now turned support. A convincing break below the latter, however, might prompt some technical selling and pave the way for deeper losses.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
