Gold Prices Rally as Dollar Weakens: Can XAU/USD Break Higher?
Gold prices edged higher on Monday as the U.S. dollar weakened, with traders closely watching President Donald Trump’s tariff strategy and ongoing geopolitical developments.
The U.S. Dollar Index (DXY) hovered near a two-month low following weaker-than-expected economic data, making gold more attractive to non-dollar investors.
Analysts suggest that uncertainty surrounding Trump’s tariff plans and negotiations with Russia and Ukraine could drive market volatility. While trade tensions and inflation fears support gold’s bullish outlook, a peace deal between the U.S. and Russia could reduce safe-haven demand.
Gold Gains as Dollar Weakens
Gold’s rally is largely fueled by a softer dollar, which makes bullion cheaper for holders of other currencies. The DXY’s decline comes after recent U.S. economic reports indicated slowing growth, leading to speculation about potential policy shifts.
-
Trade War Concerns: President Trump reaffirmed his stance on auto tariffs, hinting at potential levies as early as April 2. This could spark retaliatory measures from major economies, keeping gold demand elevated.
-
Inflation Hedge: With tariff discussions heating up, investors see gold as a traditional hedge against inflation and economic uncertainty.
-
Geopolitical Uncertainty: U.S. officials are set to engage in peace talks with Russia and Ukraine in Saudi Arabia this week. Any progress in negotiations may ease market fears, dampening gold’s appeal.
Kelvin Wong, Senior Market Analyst at OANDA Asia-Pacific, highlighted that Trump’s tariff enforcement strategy remains a key driver of gold prices. Meanwhile, Tim Waterer, Chief Market Analyst at KCM Trade, noted that if peace talks succeed, safe-haven demand for gold may weaken.
Gold Technical Analysis – Key Resistance Levels
Gold (XAU/USD) is currently trading at $2,900, down 0.12% for the session, after reaching a high of $2,905 and a low of $2,898. The metal is attempting to stabilize after a sharp pullback, finding support at $2,877, where a rising trendline reinforces its long-term uptrend.
However, the 50-period EMA at $2,902 is acting as strong near-term resistance, preventing an extended move higher. If gold successfully breaks above $2,902, the next targets will be $2,918, followed by $2,940. A sustained rally above these levels could push XAU/USD toward $2,961, its recent swing high.
On the downside, if sellers regain control, immediate support lies at $2,895, with stronger levels at $2,865 and $2,848. A break below these zones could signal further downside pressure, testing the next critical support at $2,820.
What’s Next for Gold Prices?
Gold remains at a pivotal juncture, where a decisive move above or below $2,902 will determine its next trend. Traders are closely monitoring the tariff situation and geopolitical developments for clues on market direction.
-
Bullish Scenario: A breakout above $2,902 could trigger gains toward $2,918 and $2,940.
-
Bearish Scenario: Failure to hold $2,895 could accelerate losses toward $2,865 and $2,848.
-
Macroeconomic Drivers: Tariff policies, peace talks, and the U.S. dollar’s trajectory will play a crucial role in shaping gold’s outlook.
With global uncertainty still looming, gold remains a preferred asset for investors hedging against economic and political risks. A breakout in either direction will provide traders with the next major trend signal.
ABOUT THE AUTHOR
See More
Sidebar rates
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals