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    Gold Extends Rally as Safe-Haven Demand Rises

    January 31, 2025

    Key Points:

    • Spot gold reached $2,799.47 before closing at $2,794.33 per ounce.
    • Rising inflation fears and Trump’s 25% tariff threats fueled gold’s appeal.

    Spot gold climbed 0.1% to $2,794.33 per ounce, after hitting an intraday record high of $2,799.47. The metal is set for its fifth consecutive weekly gain, having risen 1% this week.

    The rally was fueled by traders shifting into safe-haven assets amid concerns about trade policies, inflation risks, and monetary policy uncertainty.

    Trump’s Tariff Threats

    Gold demand spiked following Donald Trump’s reaffirmation of a 25% tariff on imports from Mexico and Canada. Markets perceive these tariffs as inflationary, potentially leading to higher consumer prices and prolonged trade tensions.

    Historically, gold serves as a hedge against inflation and cross-border risks, making it a favoured asset during times of economic instability.

    Traders Await Key U.S. Inflation Data

    Market focus now shifts to the U.S. Personal Consumption Expenditures (PCE) price index, a crucial inflation measure expected later today. This report will shape expectations regarding the Federal Reserve’s rate policy.

    U.S. Q4 GDP data released Thursday showed moderate economic growth, leading traders to expect only gradual Fed rate cuts. Fed Chair Jerome Powell reaffirmed that future rate moves will depend on inflation and jobs data, keeping gold traders on edge.

    Technical Outlook

    The XAUUSD (Gold) price closed at 2794.33, rising 1.26%, with strong bullish momentum observed throughout the session. Price action shows a steady uptrend, supported by short-term moving averages (5,10,30-period), which are aligned upward. The MACD is indicating weakening momentum, as histogram bars have started contracting, suggesting a potential slowdown. Resistance is seen at 2799.47, the session’s high, while support is near 2744.89.

    Picture: XAUUSD pushes toward 2800, maintaining bullish momentum amid dollar weakness and safe-haven demand, as seen on the VT Markets app.

    Gold’s strength aligns with recent market trends, driven by dollar weakness and lower US Treasury yields, as traders anticipate potential Federal Reserve rate cuts.

    Safe-haven demand remains elevated amid geopolitical tensions and US economic data releases this week. Traders should monitor whether gold can break 2800, signalling further upside, or if profit-taking leads to a pullback towards 2760 – 2745.

    Gold remains in a strong uptrend, with key drivers supporting further gains. A break above $2,800 could accelerate buying interest, but traders remain wary of resistance at current levels.

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