Gold Hits $3,400 amid Trade Tensions and Weaker USD
Gold prices soared to a record high of $3,400 per ounce on Monday, fueled by escalating U.S.-China trade tensions and a weakening U.S. dollar, boosting demand for safe-haven bullion.
Spot gold rose 2.2% to $3,401.49 per ounce by 1142 GMT, after hitting an all-time peak of $3,403.90 earlier. U.S. gold futures gained 2.6% to $3,413.90.
Trade Tariffs Spark Economic Concerns
U.S. President Donald Trump’s aggressive trade policies, including tariffs of up to 145% on Chinese goods and some duties reportedly reaching 245%, have heightened fears of a U.S. recession.
China’s retaliatory tariffs of 125% on U.S. products have further eroded investor confidence in global trade stability.
“Ongoing concerns on the role of dollar as reserve currency is supporting gold, with prices likely to stay supported,” said UBS analyst Giovanni Staunovo.
These developments have clouded the economic outlook for the world’s largest economy, prompting a shift toward safe-haven assets like gold.
Dollar Weakness Amplifies Gold’s Appeal
The U.S. dollar slumped to its lowest level since April 2022, driven by tariff-related uncertainties and Trump’s recent criticisms of Federal Reserve Chair Jerome Powell.
A weaker dollar makes gold, priced in greenbacks, more affordable for foreign buyers, further fueling its rally.
Despite Powell’s hawkish stance that the Fed is “well-positioned to wait for more clarity” before adjusting policy, markets anticipate a resumption of rate cuts in June, potentially lowering borrowing costs by a full percentage point by year-end.
This outlook supports non-yielding assets like gold.
Technical Outlook and Market Dynamics
Gold has surged over $700 since January 2025, compared to the 12 years it took to rise from $1,000 to $2,000 per ounce.
However, the daily Relative Strength Index (RSI) above 70 indicates overbought conditions, suggesting a possible near-term pause.
“The next potential milestone for gold could be around the $3,500 level, though positioning may appear crowded,” said IG market strategist Yeap Jun Rong.
Support levels are near $3,350 and $3,329, with a break below $3,284 potentially triggering deeper losses.
With no major U.S. economic data due Monday, focus shifts to upcoming flash PMIs and trade developments, which could further influence gold’s trajectory.