XAU/USD reaches records amid escalating US-China trade war

• Escalating tensions between the United States and China put markets in risk-off mode.
• Wall Street resumed its bearish route with the three major indexes down over 4% each.
• XAU/USD holds on to solid gains around $3,160 after reaching fresh record highs.

The bright metal soared on Thursday, hitting a fresh all-time high of $3,175.00 a troy ounce during American trading hours. The US Dollar (USD) plummeted on headlines indicating the trade war unleashed by US President Donald Trump is far from over.

Trump announced massive retaliatory tariffs last week, only to pause most of them on Wednesday. Stock markets collapsed with the original news, recovering with the more optimistic pause. However, the good mood was short-lived. The White House confirmed on Thursday that levies on China account for 145%, the original 20% plus an additional 125%, which followed Beijing’s announcement of retaliatory 84% levies.

Tensions between the two countries revived concerns about a potential United States (US) recession around the corner. Even further, the US March Consumer Price Index (CPI) released earlier in the day showed inflationary pressures eased by more than anticipated, which will help the Federal Reserve (Fed) extend its wait-and-see stance on monetary policy. With easing inflation and fears of an economic setback, it’s not crazy to think the Fed could even hike interest rates in the future.

Wall Street plummeted with the news, falling alongside the USD. At the time of writing, the Dow Jones Industrial Average is down roughly 4%, while the Nasdaq Composite and the S&P 500 shed over 5% each.

Technical Outlook

From a technical perspective, Valeria Bednarik, FXStreet Chief Analyst, notes: “The XAU/USD pair daily chart shows that additional gains are likely, given the strong upward momentum. Technical indicators head north almost vertically, while still far from overbought levels. At the same time, the bright metal extended its advance beyond a now bullish 20 Simple Moving Average (SMA), currently at $3,052. Finally, the 100 and 200 SMAs also aim north, but far below the shorter one.”

Bednarik foresees XAU/USD reaching the $3,200 region in the upcoming sessions.