Gold (XAUUSD) Price Forecast: Bulls Watching Powell and Xi as Trade War Fears Grow
News Summary
Gold prices posted an eighth straight weekly gain, settling at a new high of $4016.68 per ounce, driven by rate cut expectations and escalating geopolitical risks. Markets are pricing in a 95% chance of a Fed rate cut in October and are leaning towards another cut by year-end, with investors closely watching upcoming remarks from Chair Powell for policy signals. US President Trump's renewed threat of sweeping new tariffs on Chinese imports and public rejection of talks with President Xi have reignited trade war fears, adding a fresh safe-haven bid to the gold market. Political instability in Europe and dovish expectations from the Bank of Japan also contributed to gold's rally. China's central bank added to its reserves for the 11th consecutive month, and ETF inflows continued, indicating deeper hedging against economic and policy instability by institutions and central banks. UBS and Goldman Sachs have both raised long-term gold forecasts. While fundamentals remain bullish, technical analysis suggests short-term topping risk, with traders urged to monitor Powell's tone and the upcoming CPI report.
Background
The current year is 2025, and Donald J. Trump is the incumbent US President, with his administration navigating a complex economic and political landscape. The US government shutdown, now in its third week, has delayed critical economic data releases (e.g., jobs report, CPI), heightening market speculation regarding the Federal Reserve's policy intentions. Consequently, public comments from Fed officials have become crucial for market expectations. Globally, geopolitical tensions are rising, with political or economic uncertainties present in Europe (France) and Asia (Japan). US-China trade relations have been volatile throughout President Trump's previous and current terms, and his renewed tariff threats signal a potential escalation of trade friction. Central banks worldwide continue to accumulate gold, reflecting a broader concern about the stability of the global economic and financial system.
In-Depth AI Insights
What are the underlying strategic motives behind the Trump administration's renewed tariff threats on China, especially amidst global economic uncertainty? - Beyond stated protectionist goals, this could be a strategic bargaining chip to secure more favorable terms in future trade agreements or to exert pressure on China regarding other geopolitical issues. It creates leverage. - Set against a backdrop of potential Federal Reserve monetary easing, tariffs might be a deliberate hedge, aiming to stimulate domestic production to cushion against economic slowdowns while further advancing the