Gold registers new all-time high then retreats

Gold prices registered a new all-time high of $2,956 per ounce on Monday, then dropped back to $2,949 per ounce. If gold prices rise, they may encounter resistance at $2,955 per ounce, while if gold prices decline, support may be encountered near $2,877 per ounce. 

Gold prices reached a new all-time high of $2,956 per ounce on Monday but could not maintain their bullish momentum and dipped later. Gold prices are trading in overbought conditions but are still likely to rise to new record highs in the following days as demand for safe-haven assets remains elevated. 

Uncertainty over US President Donald Trump’s future policies and trade tariffs promotes a risk aversion sentiment, raising the appeal of safe-haven assets, such as gold. Concerns that Trump’s trade policies may ignite global trading wars are raising the appeal of gold. 

US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. Trump has threatened that he will announce reciprocal tariffs on many countries, which would raise US import taxes to match those imposed by the country’s other trading partners. If Trump goes through with these heavy tariffs, global inflation is likely to rise and the economic outlook will worsen, thus promoting a risk aversion sentiment that boosts safe-haven assets.

Gold prices have been typically directed by the dollar’s movement, as the competing gold typically loses appeal as an investment when the dollar rises. The dollar gained strength on Monday and the index rose from 106.2 to 106.6. US treasury yields declined, putting pressure on the dollar, with the US 10-year bond yield dropping from 4.43% to 4.40%.

US President Donald Trump and Russian President Vladimir Putin met in Riyadh, Saudi Arabia last week, but the meeting was fruitless, boosting safe-haven assets. 

Gold prices are under pressure by decreased Fed rate cut expectations. The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%. Markets odds of rate cuts within the year are currently between 25 and 50 basis points as inflationary pressures remain high.

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Written by:
Myrsini Giannouli

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