Gold (XAU/USD) kicked off the week with a fresh surge, climbing to new record highs near $3,400. The precious metal is gaining momentum as the US Dollar (USD) struggles, with market sentiment shaken by political pressure on the Federal Reserve (Fed).
The US Dollar Index (DXY), which measures the Greenback against six major currencies, tumbled to around 98.00 — its lowest level in three years. A weaker Dollar traditionally boosts Gold’s appeal by making it cheaper for investors holding other currencies.
Tensions escalated after President Donald Trump sharply criticized Fed Chairman Jerome Powell for not cutting interest rates, despite declining prices in sectors like Oil. Trump did not shy away from suggesting he could swiftly remove Powell if needed. “The Fed really owes it to the American people to get interest rates down. That’s the only thing he’s good for,” Trump said Friday. White House economic adviser Kevin Hassett confirmed the administration is exploring options to oust Powell, fueling fears over the Fed’s independence and further weakening the USD.
Meanwhile, ongoing trade uncertainty is also eroding the Dollar’s traditional safe-haven status. Trump’s aggressive tariff measures have backfired, inflicting damage on the US economy and heightening fears of a broader slowdown — a scenario that typically favors safe-haven assets like Gold.
Market Outlook: Gold Could Face Pressure if Trade Deals Progress
Despite Gold’s impressive rally, there are signs the uptrend could slow if global trade tensions ease. Recent remarks from President Trump signal progress in trade negotiations. After productive meetings with leaders from Mexico and Japan, Trump expressed optimism, posting on TruthSocial, “Every Nation, including China, wants to meet! Today, Italy!”
Over the Good Friday weekend, Trump doubled down, saying, “There will be a trade deal, 100%,” following talks with Italy’s Prime Minister Giorgia Meloni. Optimism also extended toward China, with Trump describing ongoing discussions as “very good.” US Commerce Secretary Howard Lutnick added to the upbeat sentiment, stating he is confident about reaching an agreement with China.
Should these trade deals materialize, reciprocal tariffs could be reversed, reducing global economic risks. In such a case, the safe-haven appeal of Gold might diminish, leading to potential price corrections.
Technical Analysis: Gold Eyes $3,500 After Bullish Breakout
Gold’s surge past $3,400 comes after a strong breakout from a year-long Rising Channel pattern on the daily chart, with the upper trendline traced from the April 12, 2024, high at $2,431, and the lower trendline from the February 15, 2024, low of $1,990.30.
All major Exponential Moving Averages (EMAs) are trending upward, underscoring a powerful bullish setup. The 14-day Relative Strength Index (RSI) has spiked toward 75.00, indicating robust momentum, though it also hints at overbought conditions.
On the downside, immediate support is seen at the April 11 high of $3,245. If Gold sustains its rally, the next major resistance stands at the psychological $3,500 mark, a key milestone traders are eyeing.
