Summary:
Gold traded above $3,100 on Tuesday as tariff uncertainty fueled safe-haven demand, boosting inflation concerns and economic growth risks.
Gold prices traded above $3,100 on Tuesday amid strong upside momentum, as uncertainty around tariffs that would stoke inflation and hinder economic growth lifted safe-haven demand.
The White House confirmed that Trump will impose new tariffs on Wednesday, though it provided no details about the size and scope of trade barriers. Other countries have threatened countermeasures.
Bullion has gained around 19% so far this year, after rising more than 27% in 2024, supported by a favourable monetary policy backdrop, robust central bank buying and demand for ETF.
BofA has raised its gold period average forecasts for this year and next to $3,063 and $3,350. It noted that central banks currently hold about 10% of their reserves in gold, and could raise this figure to over 30%.
However, the bank added that US fiscal consolidation, reduced geopolitical tensions, and a return to collaborative inter-governmental relations, including more targeted tariffs, are key risks to bullion's rally.
Goldman Sachs also raised its forecast range to $3,250-$3,520 from $3,100-$3,300 earlier, according to its research note. It expects large Asian banks to continue aggressive gold purchases in the years ahead.
Bullion's RSI stands well above 70, indicating the market is overbought. Therefore, it could retest $3,150 before a moderate pullback towards $3,100.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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