Gold Price Rockets Past $3,450 on Tariffs, Fed Easing Hopes, and Central Bank Demand

XAU/USD Breaks Above $3,450 as Tariffs, Fed Policy, and Geopolitics Drive Record Highs

The gold market is experiencing one of its most aggressive rallies in decades, with XAU/USD surging to all-time highs beyond $3,450 per ounce and Comex futures briefly touching $3,534. This surge is the result of intertwined macroeconomic and geopolitical catalysts: aggressive U.S. tariff policy, sustained central bank buying, an increasingly dovish Federal Reserve outlook, and heightened global uncertainty. Over the last month alone, gold futures have climbed 3.8%, extending a 43% year-over-year gain, while spot prices have consistently held above the $3,400 threshold despite intermittent profit-taking.

Tariff Shockwave Reshapes Gold’s Physical Flow

A late-July directive from U.S. Customs and Border Protection confirmed that one-kilo and 100-ounce gold bars imported from Switzerland would face 39% reciprocal tariffs, upending expectations that bullion would be excluded from the latest trade measures. This sent Comex futures to record highs as traders priced in higher import costs and potential disruptions to New York’s physical settlement process. The U.S. market has since developed a price premium over London, reflecting uncertainty in the physical delivery chain. With Switzerland dominating global refining capacity, these tariffs—if enforced—could significantly raise transaction costs and weaken U.S. futures’ competitiveness in global price discovery.

Federal Reserve Rate-Cut Speculation Gains Momentum

The macro backdrop is a key tailwind for gold. A shockingly low 73,000 nonfarm payrolls figure for July, alongside heavy downward revisions for prior months, has pushed rate cut expectations to a 92% probability for a 25-basis-point move in September, with traders betting on at least two cuts by year-end. Unemployment rising to 4.2% reinforces this dovish tilt. Lower rates reduce the opportunity cost of holding non-yielding assets like gold, while a softer U.S. dollar (DXY at 98.14) further boosts XAU/USD’s appeal to global investors.

Central Bank and ETF Flows Provide Structural Support

Sustained demand from the official sector underscores gold’s bullish foundation. The People’s Bank of China extended its buying streak to nine consecutive months, amassing more than 120 tons of gold in 2025. India has also increased reserves, reflecting a wider push among emerging markets to diversify away from the dollar. ETF flows have mirrored this trend, with 74.56 metric tons of inflows in July alone, the largest monthly increase in years. SPDR Gold Shares (GLD) has seen robust capital inflows as institutions hedge against currency depreciation and geopolitical instability.

Geopolitical Risk Premium Expands in Global Pricing

The safe-haven premium in gold is being reinforced by rising political risks. Tariffs on 50% of Indian imports, near-100% duties on semiconductors, and retaliatory trade measures are driving global uncertainty. Historical precedent from the 2018–2019 U.S.–China trade war shows gold’s ability to sustain an uptrend even in the face of a firm dollar. Flashpoints in the Middle East, continued instability in Ukraine, and trade disputes with key economies are creating a persistent bid for gold as a politically neutral store of value.

Technical Landscape Points to Higher Targets

Gold has held the $3,383–$3,385 breakout zone and is consolidating between $3,380 and $3,400, with the daily RSI remaining in bullish territory. A breakout above $3,452 opens the path toward the April peak of $3,500, followed by the recent futures high of $3,534, and potentially $3,600 if momentum accelerates. Key support is located at $3,353–$3,350 (200-period SMA on the 4H chart), with deeper cushions at $3,315 and $3,300. With COMEX net-long positions at their highest since 2020, any dips are likely to be met with aggressive buying.

Investor Positioning and Strategic Approaches

Sentiment is decisively bullish, but extended positioning warrants tactical discipline. Upcoming U.S. CPI and PPI data in August could trigger volatility. For portfolio allocation, physical bullion and ETFs like GLD remain favored for conservative investors, while high-beta mining equities and leveraged futures strategies are attracting more aggressive capital. Pairing gold with Treasury Inflation-Protected Securities (TIPS) is gaining traction as a hedge against both real-rate shifts and systemic shocks.

Verdict: BUY Bias with Strong Bullish Outlook for XAU/USD

With central bank buying, dovish Fed expectations, protectionist trade measures, and geopolitical instability all converging, the outlook for XAU/USD remains strongly bullish. Clearing $3,452 would likely trigger momentum toward $3,500–$3,534, with $3,600 a realistic medium-term target. Any retracement into the $3,350–$3,315 zone offers accumulation opportunities for both short-term tactical traders and long-term allocators.

That's TradingNEWS