Gold (XAU) Price: Breaks Above $3,400 as Trade Tensions and Dollar Weakness Persist

TLDR

• Gold hit a new all-time high of $3,430.18 per ounce, gaining over $700 since the start of 2025
• Dollar weakened after Trump’s comments about Federal Reserve Chairman Powell raised concerns about Fed independence
• China warned countries against making economic deals with the US as trade tensions escalate
• Analysts project gold could reach $4,000 by mid-2026, with Goldman Sachs among the bullish forecasters
• Technical indicators show gold is in overbought territory but maintaining its upward momentum

Gold has surged to unprecedented heights, breaking through the $3,400 per ounce barrier as global trade tensions and geopolitical risks continue to drive investors toward safe-haven assets. The precious metal touched a record high of $3,430.18 per ounce on Monday, representing an increase of more than $700 since the beginning of 2025.

The latest rally comes as the US dollar tumbled to its lowest level in three years. This weakness was partly triggered by President Donald Trump’s comments regarding Federal Reserve Chairman Jerome Powell, which have raised concerns about the central bank’s independence.

On the trade war front, China has accused Washington of abusing tariffs and warned other countries against striking economic deals with the US at China’s expense. These escalating tensions have contributed to market uncertainty, prompting investors to seek refuge in gold.

“As tariff tensions continue to move at a fevered pitch, we continue to see gold prices move to the upside as a safe haven response,” said David Meger, director of metals trading at High Ridge Futures.

Market Momentum and Technical Indicators

Gold has maintained a strong upward trajectory in 2025, hitting multiple record highs along the way. Last Wednesday, it surpassed $3,300 per ounce, and its powerful momentum pushed it up by another $100 in just a few days.

Gold Price

However, some analysts suggest caution may be warranted in the short term. According to Jim Wyckoff, senior analyst at Kitco Metals, “These much bigger daily price moves in gold are one early clue this very mature bull market run is close to climaxing and that a near-term market top may be close at hand.”

From a technical perspective, the daily Relative Strength Index (RSI) remains well above the 70 mark, indicating overbought conditions. This suggests that some consolidation or a modest pullback might occur before the next leg up.

Any corrective slide is likely to find support near the $3,425-3,423 horizontal zone ahead of the $3,400 mark. More substantial support exists around $3,358-3,357, followed by $3,344.

Factors Driving the Gold Rally

Several key factors are supporting gold’s record-breaking performance. The weakening US dollar makes bullion more appealing for holders of other currencies, while geopolitical tensions continue to boost safe-haven demand.

Trump’s criticism of Powell has raised doubts about the Fed’s independence. The president accused Powell of not moving fast enough to reduce interest rates, and reports indicate that Trump and his team are exploring whether they can remove Powell before the end of his term.

According to the CME Group’s FedWatch Tool, traders are now pricing in the possibility of a 25 basis point interest rate cut in June, with expectations of at least three rate reductions throughout 2025.

On the geopolitical front, Russian forces launched 96 drones and three missiles into eastern and southern Ukraine after a brief 30-hour Easter ceasefire. This escalation adds to the overall sense of global uncertainty.

Gold has also surpassed the record set in 1980 on an inflation-adjusted basis, when the precious metal traded at $850 per ounce early that year.

In an April report, Reuters quoted HSBC analyst James Steel highlighting a key difference between the current rally and previous ones: “The issues driving gold 45 years ago – most notably the Iranian Revolution and the oil crisis – were remedied relatively quickly, leading gold to decline. But the breakdown in international cooperation in the last few years has led to gold staying permanently high.”

Christopher Wong, strategist at Oversea-Chinese Banking Corp., noted in a Bloomberg report: “If the Fed’s credibility is called into question, that could erode confidence in the dollar and accelerate flows into havens, including gold.”

Institutional investors are also contributing to the rally. Holdings in gold-backed exchange-traded funds have risen for 12 consecutive weeks, the longest run since 2022. Central banks have been adding the metal to their reserves, underpinning robust worldwide demand.

Banks have become increasingly bullish about gold’s prospects as this year’s rally has shown remarkable strength. Goldman Sachs Group has forecast that the metal could reach $4,000 by mid-2026.

As trade uncertainties persist and geopolitical risks remain elevated, gold is likely to maintain its appeal as a safe-haven asset in the near term, despite potential short-term pullbacks due to overbought conditions.