Gold price (XAU/USD) continue to demonstrate strong bullish momentum, reaching a fresh multi-month high around $2,778 as the European trading session begins on Friday. This rally is largely driven by comments from US President Donald Trump, who stated his preference for avoiding tariffs on China, easing concerns about a potential trade war and its impact on inflation. This statement has sparked a sharp decline in US Treasury bond yields, while the US Dollar (USD) slumps to a one-month low, further boosting demand for the non-yielding yellow metal.
In addition to Trump’s remarks, market participants remain cautious about the potential economic fallout from his protectionist policies, which continue to drive capital towards safe-haven assets like gold. The US Dollar’s slide closer to monthly lows, fueled by Trump’s call for the Federal Reserve to reduce interest rates, underscores the growing expectation of a dovish shift in US monetary policy. This scenario benefits gold, which thrives in low-interest-rate environments.
Investors are increasingly betting on the possibility of two interest rate cuts by the Fed by year-end, bolstered by signs of diminishing inflationary pressures in the US. Trump’s positive comments about his trade talks with China have alleviated some of the concerns surrounding tariff-induced inflation, supporting further policy easing from the Fed. As a result, gold remains poised for continued gains, benefiting from the weakening USD and sliding US bond yields.
However, while the outlook for gold remains strong, the bullish sentiment may face resistance as the market enters overbought territory. The Relative Strength Index (RSI) on the daily chart suggests caution, and traders may await a near-term consolidation or pullback before making new bullish bets. The key resistance lies near the all-time peak at $2,790, with immediate support at $2,760. If prices dip, the $2,725-$2,720 zone could offer a solid entry point for buyers.
Also Read: Gold Targets $2,700 Amid Fed Rate Cut Speculation and Geopolitical Shifts
Gold’s momentum is likely to persist, with traders closely monitoring the upcoming flash global PMIs for further market cues.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of FXRift.com . Before making any investment decisions, you should always conduct your own research. FX RIFT is not responsible for any financial losses.
