Gold Surges on Recession Fears Amid Trade War Escalation

Gold gained nearly $100 from a minor bottom of $2956 on recession fears. It hit a low of $2956 and is currently trading around $2998.

Trade War Escalation and Market Impact

On April 9, 2025, President Trump deepened the trade war with China by increasing tariffs on Chinese imports to 104% in retaliation against China's retaliatory tariffs on US exports. This action caused serious disruption in global stock markets, with indexes such as the S&P 500 recording severe losses amidst worries of an impending bear market. China denounced the U.S. tariffs as blackmail and vowed to strike back, threatening that the intensifying trade war would increase consumer prices, complicate supply chains, and slow global trade. Trump also accused China of currency manipulation, further deteriorating the already tense trade negotiations.

Rate Cut Expectations

According to the CME Fed Watch tool, the chances of 50  bpbs rate cut on June 18th, 2025 meeting have increased to 54.4% from 6.7% a week ago.

Technical Analysis: Key Levels and Trading Strategy

Gold prices are holding below short-term moving averages 34 EMA and 55 EMA and long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2970 and a break below this level will drag the yellow metal to $2956/$2920/$2900/$2880. The near-term resistance is at $3020 with potential price targets at$3050/ $3070/$3100/$3167/$3200/$3255.

It  is good to sell on rallies around $3058-60  with a stop-loss  at $3100 for a target price of $2835.