Market Data 
- Gold price stands tall as a weakening US Dollar makes the metal more accessible to foreign currency holders.
- The non-yielding Gold rises as softer US inflation data has strengthened expectations of Fed rate cuts as early as June.
- The US Dollar continues to decline, weighed down by the intensifying US-China trade war.
Gold price (XAU/USD) gathered bullish momentum and reached a new record-peak at $3,237 in European trading on Friday, boosted by the intensifying US-China trade war, before retreating to the $3,220 region.
The US Dollar (USD) sell-off extends across the board, as traders take account of the latest China’s retaliation on US goods. China announced early Friday that it will impose 125% tariffs on U.S. goods from Saturday, up from the 84% previously announced.
Meanwhile, the latest data from the US showed that the annual producer inflation, as measured by the change in the Producer Price Index (PPI), softened to 2.7% in March from 3.2% in February.
On Thursday, the US sharply increased tariffs on Chinese imports, imposing a new 125% levy on top of an existing 20% duty — raising the total to 145%. This aggressive move overshadowed President Donald Trump’s 90-day delay on higher tariffs for other countries, heightening fears of broader economic repercussions.
Further supporting Gold’s rally, softer-than-expected US inflation data for March has fueled speculation about potential Federal Reserve (Fed) rate cuts starting as early as June. Markets are now pricing in the possibility of up to a full percentage point in rate reductions by year-end. The US Consumer Price Index (CPI) showed headline inflation easing to 2.4% year-over-year — below the forecast of 2.6% and down from February’s 2.8%. Core CPI, which excludes food and energy prices, rose by 2.8%, also under expectations. On a monthly basis, headline CPI dipped 0.1%, while core CPI edged up 0.1%.
Daily Digest Market Movers: Gold price benefits from flight-to-safety
- The US Dollar Index (DXY), which measures the US Dollar against a basket of six major currencies, was last seen losing about 1% on the day at 99.90. The DXY continues to slide amid persistent concerns surrounding both the global and US economic outlooks.
- In a move aimed at easing trade tensions, President Trump on Wednesday announced a 90-day pause on new tariffs for most US trade partners, lowering rates to 10% to create space for continued negotiations. “The 90-day pause is an encouraging sign that negotiations with most countries have been productive,” said Mark Hackett of Nationwide. “It also injects some much-needed stability into a market rattled by uncertainty.”
- Minutes from the latest Federal Open Market Committee (FOMC) Meeting suggested that policymakers are nearly unanimous in recognizing the dual challenge of rising inflation and slowing growth, cautioning that the Federal Reserve faces “difficult tradeoffs” in the months ahead.
- China’s CPI declined 0.1% year-over-year in March, following a 0.7% drop in February and falling short of expectations for a 0.1% increase. Monthly, CPI dropped 0.4%, worse than the previous month’s 0.2% decline and the forecasted figure. China’s PPI also contracted more sharply than expected, falling 2.5% annually in March versus a 2.2% drop in February and a projected 2.3% decline.
- US President Donald Trump announced a 90-day pause on new tariff hikes for most US trade partners. While tariffs on China were still raised, the broader easing of trade tensions helped calm global economic fears, improving market sentiment and limiting the upside of the XAU/USD pair.
- The latest Federal Open Market Committee (FOMC) minutes suggested broad concern among policymakers over the challenge of balancing inflation risks with slowing economic growth. Dallas Fed President Lorie Logan warned that unexpected trade measures could spur job losses and inflation, potentially forcing the Fed into a defensive stance. Weekly jobless claims also ticked up slightly to 223,000.
Gold price looks to $3,250 and beyond on bullish daily technical setup
The daily chart shows that the 14-day Relative Strength Index (RSI) is prodding the overbought region at 70, suggesting more room for upside before the buyers’ exhaustion sets in.
The immediate resistance is seen at the $3,250 psychological level, above which a fresh uptrend toward the $3,300 threshold would be in the offing.
On the downside, the initial demand area is seen at $3,200, below which the 21-day Simple Moving Average (SMA) resistance-turned-support at $3,061 could come into play.
If the correction extends, the $3,000 mark will be the last line of defense for buyers.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
