Gold price surges as trade tensions and inflation fears boost safe-haven demand

Gold prices are gaining upward momentum once again. Investors are reacting to ongoing uncertainties in global trade and shifting expectations for U.S. monetary policy. The metal’s appeal as a safe-haven asset has grown stronger due to fresh concerns surrounding U.S.-China trade tensions and high inflation forecasts. Meanwhile, the U.S. dollar has struggled to hold gains, providing further support to gold (XAU/USD). Recent technical patterns also confirm a bullish outlook, suggesting more upside may follow.

Safe-haven demand drives Gold higher amid US-China tariff escalation

Gold continues its rally, building on recent strong upward momentum. The rally is largely driven by geopolitical tensions and market fears of inflation. U.S. President Donald Trump surprised markets by pausing new tariffs on most countries for 90 days. However, he raised duties on Chinese goods significantly after Beijing retaliated. This sharp escalation is fueling concerns about a full-blown trade war between the two largest economies.

Investors worry that the trade dispute could disrupt global growth and raise prices worldwide. Such fears usually push capital into safe-haven assets like gold. Despite a rebound in equity markets, gold retained its bullish traction. This shows that inflation concerns and trade risks are now dominating investor sentiment.

Additionally, the Federal Reserve’s latest stance is influencing gold prices. After the FOMC minutes revealed caution over inflation risks, traders reduced expectations for aggressive rate cuts. Policymakers have emphasized the need to proceed carefully, especially with tariff-induced price pressures looming. Fed officials like Barkin and Musalem have warned that higher prices may persist and force the Fed to remain vigilant.

Markets are now betting on rate cuts beginning in June. However, the uncertainty over timing and the extent of these cuts keeps the dollar under pressure. This benefits gold, as a weaker dollar lowers the opportunity cost of holding non-yielding assets like bullion.

Technical analysis: Bullish reversal signals and key support

The 3-hour chart of Gold reveals a compelling bullish setup. A strong support zone, marked near the $2,970–$2,980 range, has proven significant. The chart shows three clear higher lows forming a classic inverse head and shoulders pattern. This bullish reversal pattern usually signals a potential upside breakout.

After dipping sharply earlier this week, the price bounced exactly at this support line. The chart marks this as a “Buy” zone. The rebound occurred just as the price retested the neckline of the inverted head and shoulders structure. This confluence of technical factors validates the support level as a strong demand area.

Following the bounce, gold has rallied aggressively and is now trading above $3,120. The breakout above previous resistance levels confirms renewed bullish momentum. Short-term traders may view this as a confirmation of trend reversal. As long as the price stays above the neckline, further gains toward $3,150 and possibly $3,200 appear likely.

The strength of this pattern is further validated by the sharp V-shaped recovery and a lack of follow-through selling after the recent dip. Buyers stepped in decisively, indicating strong conviction in the bullish direction.

Conclusion

Gold’s recent surge is backed by both fundamental and technical factors. Trade war fears, inflation expectations, and a dovish Fed are fueling safe-haven demand. At the same time, the price action shows a textbook reversal from a key support zone. As long as global uncertainty and monetary policy ambiguity remain, gold is likely to stay in favor. The bullish pattern on the chart strengthens the case for further gains, making gold an attractive asset in the current climate.

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