Gold’s Wild Ride: All-Time Highs Reversed by Tariff and Strong Data

Gold (XAU/USD) experienced a historic rally followed by a sharp correction last week, driven by volatility from U.S. tariff policy announcements, safe-haven demand, and evolving investor perceptions. Below is a detailed breakdown of the key drivers, technical outlook, and what to expect in the coming week.

XAU/USD (GOLD) Performance 

• Price Action
  Gold surged to a record high of $3,170, followed by a massive correction after a 5-wave bullish move. 

• Volatility picked up as the market reacted to mixed drivers
  This week’s surge in market volatility has been driven by a tug-of-war between bullish and bearish forces amidst a lot of profit-taking and economic data released. 

Let’s dive deeper into various forces that played out:

Bullish Factors

• Trade war continues to fuel uncertainty
  The back-and-forth of the trade wars has continued to disrupt the market. President Trump’s tariff announcement continues to threaten the US’s major partners, like Canada, Mexico, and China, and it is affecting consumer prices and supply chain delivery globally. Hence, investors have been buying safe-haven assets like Gold.
• Geopolitical Risk 
  Amidst all the tensions in the Middle East, which largely affect energy prices as well as causing inflation, the ongoing war in Ukraine also has an impact on global markets, causing sentiments amongst investors and an increase in geopolitical risk. This uncertainty has increased demand for assets like Gold that perform well in turbulent times.

Bearish Factors

• Strong NFP (Non-Farm Payrolls) Data
  There was a significant increase in jobs added as reported in the March NFP report from an initial forecast of 137,000 to a significant 228,000. We also saw a surge in payroll in the private sector by 209,000, which shows the strongest since December 2024. All of these gains have a bearish implication on risky assets, as well as impacting a dip in the stock market. 
• Profit-Taking
  The market has been in a bullish rally recently, with gold reaching all-time highs. However, traders locked in gains as there was a lot of profit taking. 

Events and Market Reactions

This week, the Feds will publish the FOMC meeting minutes. This would show how tariffs would be affected by inflation, and we could potentially see Gold extend downwards. Let’s review a few events and how the market would react.

Trade Policy: How US tariffs are shaking up the Global Markets 

On the 2nd of April, 2025, the President Trump administration announced new tariff fines targeting various industries like the automobile at 25% tariff and other goods ranging from 10 – 45%, with an aim to improve local manufacturing industries but rather this has created uncertainty in the markets as other partners like Canada, Mexico and the US have retaliated by slamming tariffs on goods with similar duties which has now escalated into a trade war.

Market Reaction: 

Following this announcement, the market has reacted aggressively, with the S&P 500 wiping out about $2 trillion in market capitalization as well as dropping almost 5%. This has been the worst market sell-off since 2020. Safe-haven currencies like JPY and CHF also surged. This has caused investors to raise concerns about a potential recession and inflation. 

NFP Surprising Data

The March Non-farm Payrolls (NFP) report surprisingly added 228,000 jobs as released on the 4th of April. This exceeds the forecasted reports of 137,000 jobs while the labour market has been steady despite the trade war holding at a 4.1% unemployment rate. The report also showed gains in various industries like Manufacturing, construction, and healthcare.

Market Reaction:

This week saw a rally in strength for the US Dollar (USD) against major currencies. Despite all of these gains, the uncertainty around tariffs puts a cap on them, which also leaves room for inflation as a major concern.

This week, we have the Consumer Price Index (CPI) and Producer Price Index (PPI), which would be very determinant for Gold’s next move.

Global Markets

The market has so much volatility injected right now with the tariffs and economic data, and this has so much impact on assets globally 

Currencies

Last week we saw the Euro (EUR/USD) rally over 1.5%, but we could see a potential drop if the tariff war further escalates. We have also seen JPY and CHF hit strong levels in over 6 months.

Commodities

There has been a rise in oil prices as geopolitical war tension increases, as well as concerns around tariffs. However, safe havens like Gold have kept an all-time high, and the rally on the USD strength could be capped unless we see a change in inflation data.

Technical Outlook for XAU/USD

Gold is currently trading around the key psychological level of $3000 after a strong rejection on Thursday and Friday. There could be a potential breakout or breakdown 

Bullish Scenario

Trigger:

• If the price respects the key level of $3,000 and trades above $3,135, then we look for more buys 
• We also need to see the price respect the bullish channel to trigger more buys
• A failure to hold $3000 can lead to a price reversal 

Target:
      –   If the price breaks $3,135 resistance level next target for the buys would be the psychological level of $3,200

Bearish Scenario

Trigger:

• If price breaks and closes below the $3,000 key level, then we would seek more sells to the downside
• Also, a break and retest of the channel would give more confirmation for sells 

Target:
      –   $2,900 psychological and technical level is the next target 

Summary and Week Ahead 

XAU/USD’s Insight: Markets Presenting Potential Opportunities and Risks 

Gold’s predicted trajectory is a storied tug-of-war between bullish and bearish influences. remains a tug-of-war between bullish tailwinds and bearish headwinds.

With the renewed threats from the US under Trump’s administration, unrest in the Middle East, and the Russia-Ukraine tussle, investors looking for a safe haven to shore up their finances are looking to gold. Thus, the demand for gold has been going up as people seeking to preserve their wealth rely on it to battle uncertainty.

However, bearish sentiments present as earlier investors in gold from 2024 are seeking to take their profits from its rise (27% in a year is an absolute deal). There is also the matter of treasury yields and the resilient U.S. dollar, which may threaten the yield from gold as investors may also drift to that side of the market.

Expect a volatile week ahead, but watch out for price levels as gold is likely to go in either direction they present.

Critical Events this week

• April 10th: FOMC Minutes

This would give an insightful perception into what the feds think about inflation and interest rates. A softer policy might see a bullish push, while a hawkish move could see gold push lower and strengthen the dollar.

• April 10th: CPI 

The CPI report for March would be very critical to determine inflation trends. There would be a lot of market volatility as any surprise to the upside can confirm the hawkishness on Gold.

• April 11th: PPI

A higher increase in reading can signify inflationary pressures, while a lower-than-expected outcome can ease the pressure on Gold.

Strategy

Traders should prioritise risk management given a number of red folder news items on the calendar. Pre-positioning of trades ahead of the FOMC and CPI is very key, so consider lesser risks on positions or adopting a reactive approach.