Gold prices climbed on Wednesday as persistent trade uncertainties and inflation worries kept investors on edge. Despite the United States and China confirming a new framework aimed at reviving trade cooperation, market sentiment remained cautious. As a traditional safe-haven asset, gold attracted demand from investors bracing for potential market volatility in the near term.
US Commerce Secretary Howard Lutnick indicated that a trade proposal would soon be presented to President Trump, while China’s delegation must await approval from President Xi Jinping. Without this crucial political endorsement, traders are viewing the agreement as tentative and speculative. Although China’s announcement to lift restrictions on rare earth exports offered some relief, it was insufficient to alleviate broader trade tensions.
Analysts expressed skepticism about the trade deal’s impact. Matt Simpson, senior analyst at City Index, said, “We know there’s a framework, but until Trump or Xi officially signs off, markets will stay nervous — and that’s supporting gold.”
Inflation and Federal Reserve Outlook Fuel Bullish Sentiment
Attention now shifts to inflation, with the upcoming US Consumer Price Index (CPI) report at 12:30 GMT expected to influence the Federal Reserve’s policy decisions. Given persistent inflationary pressures alongside renewed tariff threats, economists largely anticipate no interest rate cuts this summer.
Adding to the cautious outlook, the World Bank downgraded its global growth forecast for 2025 to 2.3%, citing ongoing trade conflicts and rising policy uncertainty as key risks. This combination of sluggish economic growth and sustained inflation — commonly referred to as stagflation — historically drives investors toward gold.
Factors Driving Gold’s Current Strength:
- Safe-haven demand amid geopolitical tensions
- Inflation concerns fueled by tariffs
- Delayed Fed rate cuts and dovish policy expectations
Technical Analysis: Gold Eyes $3,375 Resistance
From a technical standpoint, gold (XAU/USD) is rebounding from strong trendline support near $3,315, forming a solid base. After briefly dipping below its 50-day exponential moving average (EMA) at $3,333, prices recovered, supported by bullish candlesticks and a positive MACD crossover signaling growing upward momentum.
Price action reveals a higher-low pattern with a doji candle at support followed by green candles, indicating a morning star reversal formation. A sustained close above $3,349 could open the path toward $3,375, with $3,405 as a further target. However, traders should be cautious of false breakouts; a retreat below $3,315 may trigger a test of $3,271 support.
Trading Strategy:
- Entry: Above $3,349
- Stop-loss: Below $3,315 (trendline support)
- Target: $3,375 (short-term), $3,405 (extended)
- Risk Level: Moderate, supported by MACD and candlestick signals
Summary
Gold’s short-term outlook remains bullish as macroeconomic uncertainties, inflation risks, and technical factors converge. A confirmed breakout above key resistance levels could fuel further gains, but traders should remain alert to US inflation data and evolving geopolitical developments.
