Gold is on track for a new all-time high

Gold prices surged to $3,004 per ounce last week, their highest level in history. Gold prices pared some gains at the end of the week, dropping to $2,990 per ounce but rose again on Monday, reclaiming the 3,000 per ounce level. If gold prices rise, they may encounter resistance at $3,004 per ounce, while if gold prices decline, support may be encountered near $2,880 per ounce. 

Gold prices reached a new all-time high of $3,004 per ounce last week, on US tariff concerns and soft US inflation data. Gold prices rose above the key $3,000 per ounce level on Monday and are likely to touch new historical highs this week.

Uncertainty over US President Donald Trump’s future policies and trade tariffs promotes a risk aversion sentiment. Concerns that Trump’s trade policies may ignite global trading wars are raising the appeal of safe-haven assets, such as gold. Trump’s tariffs are likely to raise global inflation and lower the economic outlook, thus promoting a risk aversion sentiment that boosts safe-haven assets. Trump’s economic policies are raising concerns that the US economic growth may slow down. Many analysts are already expressing concerns that the US will enter a recession. 

Gold prices are supported by rising 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%. 

Market odds of rate cuts within the year are on the rise, putting pressure on US treasury yields and boosting gold prices. Fed rate cut expectations rose after the release of the US inflation report last week. The Fed, however, is widely expected to keep interest rates steady at this week’s policy meeting on the 19th. Markets are currently pricing in three rate cuts in 2025, with the first rate cut in June, compared to just two rate cuts the week before.

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 dipped on Monday and the index dropped from 103.7 to 103.4. US treasury yields remained steady, with the US 10-year bond yielding approximately 4.31%.

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Written by:
Myrsini Giannouli

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