TLDR
- Gold prices hit a record high of $3,430.18 per ounce on Monday before retreating slightly on Tuesday
- The dollar weakened following President Trump’s comments about Federal Reserve chairman Powell
- Gold has gained over $700 since the start of 2025
- Trade tensions between US and China continue to fuel safe-haven demand
- Technical indicators show gold is in overbought territory, suggesting possible consolidation
Gold prices surged to unprecedented heights on Monday, breaking above $3,400 per ounce as investors rushed to the safe-haven asset. The precious metal hit a record high of $3,430.18 per ounce during Monday’s trading session before slightly retreating on Tuesday from the $3,500 mark.
Spot gold rose 2.7% to $3,417.62 an ounce at 1:46 p.m. ET on Monday, while U.S. gold futures settled 2.9% higher at $3,425.30.
The rally comes as the dollar tumbled to its lowest level in three years. This weakness makes bullion more appealing for holders of other currencies.
President Donald Trump’s comments about Federal Reserve chairman Jerome Powell have rattled markets. Trump accused Powell of not moving fast enough to bring down interest rates.
Reports suggest Trump and his team are studying whether they can remove Powell before the end of his term. This has raised concerns about the Fed’s independence.
Trade War Tensions Fuel Rally
On the trade war front, China accused Washington of abusing tariffs and warned countries against striking broader economic deals with the U.S. at its expense.
Trump’s back-and-forth tariff announcements have weakened investor confidence in the U.S. economy. This uncertainty over the economic impact of U.S.-China trade tensions has spurred demand for safe-haven assets.
“As tariff tensions continue to move at a fevered pace, we continue to see gold prices move to the upside as a safe haven response,” said David Meger, director of metals trading at High Ridge Futures.
Gold has gained more than $700 since the start of 2025. It passed the $3,300 mark last Wednesday and its strong momentum pushed it up by another $100 in just a few days.
Technical Outlook and Market Expectations
The daily Relative Strength Index (RSI) for gold remains well above the 70 mark, indicating overbought conditions. This suggests caution for buyers in the short term.
Any pullback is likely to find support near the $3,425-3,423 horizontal zone ahead of the $3,400 mark. A break below these levels could lead to further declines toward the $3,358-3,357 region.
Traders are also watching upcoming economic indicators. The Richmond Manufacturing Index and speeches from Fed members will be closely monitored.
The focus will then shift to flash PMIs on Wednesday, which could provide insight into global economic health and affect gold prices.
According to the CME Group’s FedWatch Tool, traders expect the Fed to cut interest rates by 25 basis points in June and deliver at least three rate reductions in 2025.
Geopolitical tensions are adding to gold’s appeal. Russian forces recently launched 96 drones and three missiles into eastern and southern Ukraine after a brief Easter ceasefire.
Among other precious metals, spot silver held steady at $32.60 an ounce on Monday. Platinum was down 0.6% at $961.61, while palladium dropped 3% to $934.25.
“There’ll be pullbacks and profit-taking at times, but we still believe in the underlying trend to be on sideways to higher trajectory,” Meger added.
Some analysts suggest the bull market might be reaching its peak. Jim Wyckoff, senior analyst at Kitco Metals, noted: “These much bigger daily price moves in gold are one early clue this very mature bull market run is close to climaxing.”
However, with ongoing trade uncertainties, a weakening dollar, and expectations of Fed rate cuts, many market watchers believe gold’s upward path remains clear for now.
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