Gold price (XAU/USD) retains its bullish bias through the first half of the European session on Monday and touches a fresh all-time high, around the $2,896-$2,897 region in the last hour. Concerns about the potential economic fallout from US President Donald Trump's tariffs and escalating US-China trade tensions continue to boost demand for the safe-haven bullion. Moreover, concerns that Trump's protectionist policies would reignite inflation in the US turn out to be another factor that benefits the precious metal's status as a hedge against rising prices. 

Meanwhile, the US Dollar (USD) attracts some follow-through buyers amid bets that the Federal Reserve (Fed) would stick to its hawkish stance amid a still resilient US labor market and inflationary concerns. This, however, does little to dent demand for the non-yielding Gold price or hinder the strong intraday positive move. That said, overbought conditions on the daily chart might hold back traders from placing fresh bullish bets around the XAU/USD. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the commodity is to the upside. 

Gold price continues to attract safe-haven flows amid trade war fears

• US President Donald Trump said on Sunday he will introduce new 25% tariffs on all steel and aluminum imports into the US. Trump added that he would announce reciprocal tariffs on all countries and match their tariff rates, bolstering the safe-haven Gold price at the start of a new week. 
• Russian Deputy Foreign Minister Galuzin said there are no satisfactory proposals to start talks on Ukraine, and that statements from the West and Ukraine are nothing but buzz-building. US Vice President JD Vance is supposedly headed to Germany this week to lay out details of the US proposal.
• Investors remain worried that Trump's trade policies could put upward pressure on inflation in the US. This, along with the upbeat US Nonfarm Payrolls (NFP) report released on Friday, could limit the scope for the Federal Reserve to ease further and might cap the non-yielding yellow metal.
• The closely-watched US monthly jobs data showed that the world's largest economy added 143K jobs in January compared to 170K anticipated and the previous month's upwardly revised reading of 307K. This, however, was offset by an unexpected dip in the Unemployment Rate to 4.0%.
• Minneapolis Fed President Neel Kashkari said on Friday that he would move towards supporting further rate cuts if they see good inflation data and the labor market stays strong. Kashkari added that we are in a good place to sit here until we get more information on the Trump administration's policies.
• Chicago Fed President Austan Goolsbee noted that inconsistent policy approaches from the US government cause a high level of economic uncertainty that makes it difficult for policymakers to draw a bead on where the economy, and inflation specifically, is likely heading. 
• Meanwhile, Fed Board of Governors member Adriana Kugler said that US growth and economic activity remain healthy overall, but noted that progress toward the 2% inflation goal has been somewhat lopsided. Recent progress on inflation is slow and uneven, Kugler added.
• A modest US Dollar strength might hold back traders from placing aggressive bullish bets around the commodity. Traders now look to Fed Chair Jerome Powell's semi-annual congressional testimony and the US consumer inflation figures for a fresh directional impetus. 

Gold price bulls could take pause for a breather amid overbought daily RSI

(Click on image to enlarge)

From a technical perspective, the Relative Strength Index (RSI) on the daily chart is still flashing overbought conditions, warranting caution for bullish traders. This makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for an extension of the Gold price’s well-established uptrend. Hence, any subsequent move up is likely to confront some barrier near the $2,886-2,887 region, or the all-time peak, ahead of the $2,900 mark.

Meanwhile, any corrective slide below the $2,855-2,854 immediate support could be seen as a buying opportunity. This, in turn, should help limit losses for the Gold price near the $2,834 region. Some follow-through selling, however, could drag the XAU/USD further toward the next relevant support near the $2,815-2,814 area en route to the $2,800 round-figure mark. 

More By This Author: