Article by: ETO Markets

Gold prices in XAU/USD are surging to record highs ahead of the European session, with bulls targeting the $3,300 mark as persistent trade-related uncertainties and recession fears in the US bolster demand for safe-haven assets. This upward trend is further supported by expectations of aggressive Federal Reserve easing, despite short-term overbought signals, and a weakening US dollar driven by erratic trade policies under President Trump. His recent reversal on hefty tariffs—with temporary exemptions granted on some imports while maintaining high duties on others—has eroded investor confidence in US economic policies, a sentiment compounded by China's retaliatory tariff hikes that stoke fears of a worsening trade war. The combination of these factors has not only driven flows toward gold but also led to sharp declines in the US dollar, which fell to its lowest level since April 2022. As investors closely watch for new cues from Fed Chair Jerome Powell regarding the future path of interest rates, these trade and policy developments continue to underpin the robust and sustained momentum in gold prices.

From a technical perspective, the Relative Strength Index (RSI) on both daily and 4-hour charts indicates that gold is slightly overbought, suggesting that bullish traders should exercise caution before committing to further long positions. It appears wise to wait for a period of consolidation or a modest pullback to confirm the strength of the upward move rather than immediately entering new positions. In the interim, any corrective pullback is expected to find support around the $…–$… area, with additional support potentially emerging near the $…–$… region. Even if further declines occur, they are likely to be limited and could present a buying opportunity, particularly if the price remains above the key $… level. On the other hand, the psychological level $… could be a immediate resistance level due to the overbought market and sentiments.