Gold Rallied Past $3,000 but Failed to Hold Above It
The gold (XAU/USD) price broke above the critical $3,000 level on Friday but failed to hold above it, finishing the day down by 0.11%.
XAU/USD has been in a strong bullish uptrend since mid-December. Investors sought a safe haven from geopolitical uncertainty and economic volatility fueled by US trade tariffs, preferring precious metals. Gold’s surge past the $3,000 was driven by ’beleaguered investors seeking the ultimate safe-haven asset given Trump’s tumult on stock markets’, said Tai Wong, an independent metals trader. Indeed, US President Donald Trump’s most recent threat of a 200% tariff on European alcohol imports intensified the worries about a global trade war. Stocks fell on the news. S&P 500, the US benchmark stock index, has lost more than 8% from its 19 February high.
"Real asset money managers, particularly in the West, needed a strong stock market and economic slowdown scare to return to gold—and that’s happening now", said Ole Hansen, head of commodity strategy at Saxo Bank.
According to Reuters, central banks’ demand also supported the gold price. China—the key gold buyer—was building its bullion reserves for a fourth straight month in February. In addition, expectations of the monetary policy easing by the US Federal Reserve (Fed) also pushed gold higher. Traders now expect the US central bank to resume interest rate cuts in June.
XAU/USD remained relatively unchanged during the Asian and early European trading sessions. Today, the focus is on developments around global trade tariffs. Also, the US Retail Sales report at 12:30 p.m. UTC may add volatility to the market. Higher-than-expected figures may pause the rally in XAU/USD. Lower-than-expected results may push the pair towards $3,000 again.
"Spot gold may retest resistance at $3,002 per ounce, a break above which could open the way toward $3,017 to $3,040 range,” said Reuters analyst Wang Tao.
Goldman Sachs reported an upside risk to its $3,100 end-2025 base scenario and to its $3,100–3,300 forecast range as US policy uncertainty may support investors’ demand.
Euro Rises on Weakening US Consumer Sentiment
The euro (EUR/USD) gained 0.25% against the US dollar (USD) on Friday. The greenback weakened following a worse-than-expected US Consumer Sentiment report.
The University of Michigan’s (UoM) latest report revealed that consumer sentiment plunged to a nearly 2.5-year low in March. Data also showed inflation expectations soared amid worries that President Donald Trump’s trade tariffs would boost prices and damage the economy. UoM noted that ’frequent gyrations in economic policies make it very difficult for consumers to plan for the future’. Personal consumption accounts for around 70% of the US Gross Domestic Product (GDP). Thus, low consumer confidence may prompt the Federal Reserve (Fed) to cut interest rates, which hurts the US dollar.
At the same time, supporting the consumer via low interest rates may prove difficult if inflation expectations are also rising.
"Trump 2.0 policies are harming the economy and the future prosperity of America. The consumer is frightened and sees sharply higher prices ahead despite the assurances from Washington that trade tariffs are good for the economy", said Christopher Rupkey, chief economist at FWDBONDS.
On Friday, the euro received an additional boost after German parties agreed on a fiscal deal that could increase defence spending and revive growth in Europe’s largest economy. German chancellor-in-waiting Friedrich Merz announced he had secured the crucial backing of the Greens for a massive increase in state borrowing.
"We expect the German fiscal reform to pass and the ECB holding rates steady in April, a more hawkish outcome than is currently priced in. The USD leg may remain somewhat volatile as US exceptionalism fears wane, but tariffs pose some USD upside risks", said Dominic Bunning, head of G10 FX Strategy at Nomura.
EUR/USD remained relatively unchanged during the Asian and early European trading sessions. Today, euro traders should focus on any news about global trade tariffs and the peace talks between Russia and Ukraine. Additionally, the US Retail Sales report at 12:30 p.m. UTC may add volatility to all USD pairs. Higher-than-expected figures may push EUR/USD down towards 1.08450. Conversely, lower-than-expected results may pull the pair towards 1.09150 again.
U.K. GDP Data Disappoints Investors
The British pound (GBP/USD) lost 0.11% against the US dollar (USD) on Friday after the U.K. Gross Domestic Product (GDP) report disappointed investors.
U.K. GDP fell by 0.1% in January, pulled down by a sharp drop in industrial output compared with December, the Office for National Statistics reported. This unexpected economic contraction has dogged Finance Minister Rachel Reeves’ attempts to ignite economic growth.
"Following the lacklustre performance in the second half of 2024, growth remains fragile due to global and domestic uncertainty", said Hailey Low, an economist at the National Institute of Economic and Social Research think tank.
According to interest rate swaps market data, investors currently price in a 34% probability of two 25-basis-point (bps) rate cuts by the Bank of England (BoE) in 2025. This is roughly the same amount of cuts investors expect from the Federal Reserve (Fed) this year. Expectations of similar interest rate paths could limit substantial movement in GBP/USD, as the relative impact on both currencies might be neutralised. Consequently, traders should closely monitor the economic data and forward guidance from both central banks, as any divergence in monetary policies could trigger GBP/USD volatility.
GBP/USD rose during the Asian and early European trading sessions. Today, GBP traders should pay close attention to updates on global trade tariffs and developments in the Russia-Ukraine peace talks. Additionally, the US Retail Sales report at 12:30 p.m. UTC may increase volatility in all USD pairs. Better-than-expected data may push GBP/USD towards 1.28900. Conversely, lower-than-expected numbers may bring the pair down towards 1.29600 again.