gold prices are stabilizing near their highest levels in three months as traders anticipate further upward momentum. After pausing on Thursday, gold is eyeing a return to the highs of around $2,760, influenced by uncertainties surrounding US trade policies and upcoming economic data.
Concerns over potential tariffs announced by the US government on imports from Canada, Mexico, China, and the European Union are driving investors toward gold as a safer investment. The lack of clarity regarding these tariffs has created a sense of caution in the markets, leading to an increased demand for gold , traditionally viewed as a safe-haven asset.
The recent remarks by the US President regarding the desire for a lower US dollar and interest rates further bolster gold ’s appeal, contributing to the metal’s upward trend. Traders are looking forward to the preliminary US Manufacturing and Services PMI reports, which may shed light on the economic landscape and influence market sentiment. Any disappointing results could heighten fears about global economic growth, prompting additional investment into gold .
In the context of international monetary policy, a potential rate hike from the Bank of Japan could lead to a depreciation of the US dollar, providing further support for gold prices. However, as the week draws to a close, there may be some profit-taking as traders adjust their positions ahead of the US Federal Reserve’s upcoming policy announcement and the advance GDP data set for release.
In terms of technical indicators, gold appears to be on track to challenge record highs of $2,790, with recent price action suggesting a breakout from a symmetrical triangle pattern. Staying above key moving averages supports a bullish outlook. For gold to maintain upward momentum, it needs to close above the November 2024 high of $2,762; otherwise, it could retreat toward the $2,700 threshold, with further downside risks evident if it falls below $2,678.
The S&P Global Manufacturing PMI serves as a crucial economic indicator, reflecting trends in the manufacturing sector. A reading above 50 indicates expansion, while a reading below suggests contraction, impacting expectations for the US dollar and broader market outlooks.
