Gold prices (XAU/USD) remain strong at the beginning of the week. The yellow metal is trading near the historic $3,500 level. Investors are increasingly turning to gold due to rising fears of a US recession. This fear comes from US President Donald Trump’s harsh international trade policies. His back-and-forth tariff decisions are affecting market confidence. The US Dollar (USD) is weakening, making gold even more attractive to investors. The ongoing uncertainty has pushed gold to new highs. Despite being technically overbought, gold still shows signs of strength.
Gold climbs sharply as Trump’s trade shake global markets
Gold continues to benefit from global tensions and weak economic sentiment. Trump’s aggressive trade stance, including fresh tariffs on Chinese goods, has added fuel to the fire. These tariffs are as high as 145%, and China has responded with its heavy duties. This trade war is shaking confidence in the US economy. Investors are now worried about a full-scale recession.
The US Dollar has dropped to its weakest point since April 2022. Even strong words from the Federal Reserve Chair, Jerome Powell, haven’t been enough to support the US dollar. Investors are looking beyond the Fed’s hawkish tone. They are instead betting on interest rate cuts by mid-year. Market participants expect a total cut of one full percentage point by the end of 2025. These expectations are pulling more buyers toward non-yielding assets like gold.
Moreover, Iran and the US are engaging in nuclear deal talks, the global mood remains tense. Russian President Vladimir Putin’s brief ceasefire has not reassured markets. Safe-haven demand for gold remains high.
Technical analysis: Gold hits fresh records at $3,500
The gold chart below shows a strong upward movement in gold prices. It shows a primary ascending channel, which guided prices upward from late 2024 into early 2025. This channel shows higher highs and higher lows, confirming a bullish trend.
Around mid-April, the price broke out above the top of this ascending channel. This breakout signals renewed bullish strength and high investor demand. After the breakout, the price climbed rapidly through the extension zones, marked with dotted lines above the main channel. These zones indicate overbought conditions, but buyers still pushed through.
The rally has been steep, and short-term charts now look overstretched. However, the structure of the chart remains solid. The breakout confirms the strength of the trend, while the extensions show how strong the buying pressure has been.
Traders may expect some short-term pullbacks due to overbought indicators. But the overall direction remains positive. As long as prices stay above the breakout level, bulls retain control. A retracement to retest the breakout zone would be healthy and could attract new buyers.
Conclusion
Gold is holding its ground near record levels due to ongoing trade tensions and weak US Dollar performance. President Trump’s tariff war has shaken global markets, pushing investors to gold. Despite overbought technical indicators, the breakout from the primary channel suggests that the bullish trend may continue. Until the geopolitical and economic outlook improves, gold is likely to remain a top choice for risk-averse investors.
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