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Gold markets are facing heightened volatility as new US tariffs on imported bullion disrupt pricing patterns and fuel uncertainty. Coupled with speculation over a potential Federal Reserve rate cut, traders are closely watching geopolitical risks and economic signals to gauge gold’s next move.
Gold prices soar as US tariffs disrupt bullion markets
Gold prices jumped sharply on Friday after reports revealed that the United States had introduced tariffs on imported gold bars, sending futures to new record highs and widening spreads in the global bullion market.
December delivery gold futures in the US surged to an all-time peak of $3,534.10 before closing 0.9% higher at $3,484.10.
Spot gold slipped 0.3% to $3,386.30 per ounce, but stayed on course for its second straight weekly advance, up 0.7%.
The rally was fuelled by a Financial Times report referencing a 31 July letter from US Customs and Border Protection, which reclassified 1-kilogram and 100-ounce bars under a tariffed import category.
This reclassification could have significant consequences for Swiss refiners, who dominate global gold bar production and exports to the US.
The shift triggered a sharp pricing divergence, with the futures–spot spread expanding by more than $100.
Alongside the tariff shock, sentiment in the gold market is being supported by mounting expectations of a US Federal Reserve interest rate cut. Weaker non-farm payroll figures last week bolstered this outlook, with CME’s FedWatch Tool assigning a 91% probability of a 25-basis-point reduction at the Fed’s next meeting.
Technical analysis
Gold (XAUUSD) is currently trading around $3,396, showing little movement on the day and consolidating just below April’s high of $3,500.16.
After a strong rally from February’s low of $2,614.80, prices have been confined to a sideways range between $3,300 and $3,500 for several months.
Picture: XAUUSD holds near 3396, trading sideways below the 3500 ceiling as MACD signals muted momentum on the VT Markets app.
Short-term moving averages – 5-day, 10-day, and 30-day – are flattening and converging, signalling market indecision.
The MACD histogram remains neutral, with signal lines hovering near the zero level, reflecting a lack of clear bullish or bearish dominance.
Immediate resistance is seen at $3,500, while support is holding at $3,355, with a broader floor near $3,200.
A sustained break above $3,500 could unleash further upside momentum, whereas a drop below $3,355 risks triggering deeper retracements.
Traders should monitor US inflation data and real yields closely, as these factors could determine the next decisive move for gold prices.
Meanwhile, former US President Donald Trump’s wider trade policy shift also took effect on Thursday, prompting several countries – including Brazil, India, and Switzerland – to rush into renegotiations to avoid the full impact.
Cautious forecast
Gold is expected to hold firm above the $3,370 level as long as tariff-related uncertainty and growing expectations of a Federal Reserve interest rate cut remain key drivers in the market.
The current backdrop of geopolitical trade tensions and shifting monetary policy outlook continues to provide a strong safety-net bid for the precious metal.
A decisive break above $3,400 could pave the way for a swift retest of the $3,500 threshold, a level that has acted as a psychological barrier in recent months.
However, traders should be mindful that thin market liquidity, combined with the widening gap between futures and spot prices, may increase price swings and trigger sudden intraday reversals.
Key support is positioned at $3,355, with a secondary cushion around $3,320. A confirmed Fed rate cut, especially one larger than the anticipated 25 basis points, could re-energise bullish momentum and potentially push gold towards new record highs.
Conversely, any easing of tariff concerns or stronger-than-expected US economic data may limit upside potential in the near term.
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