Gold continues to set new highs around $3,385/oz

Written by Linh Tran, Market Analyst atXS.com

Gold prices have continued to surge, setting a new all-time high around $3,385/oz, as defensive sentiment spreads across global financial markets. The rally remains supported by three core drivers: growing expectations that the Federal Reserve will soon shift to monetary easing, escalating trade tensions between the U.S. and China, and persistent geopolitical risks—especially as peace efforts between Russia and Ukraine remain stalled.

The spotlight this past week was on a hardline move by the Trump administration, which announced the termination of the “de minimis” rule—a trade provision that exempts imported goods valued under $800 from tariffs. For years, this loophole has been used by many Chinese companies to ship low-cost goods into the U.S. market without facing high tariff rates. Closing this channel will significantly raise the cost of Chinese goods and clearly signals Washington’s increasingly tough stance on bilateral trade.

Tensions between the world’s two largest economies intensified further with reports that China has canceled a series of Boeing aircraft orders, citing a need to “reassess strategic priorities.” Although Chinese authorities have not issued any official statements regarding the move, analysts widely interpret this as a form of indirect economic retaliation, meant to signal that Beijing is also capable of leveraging market power to apply pressure on Washington.

China has also warned that it will retaliate against any countries that cooperate with the U.S. in ways that undermine Beijing’s interests. The Chinese Ministry of Commerce stated, “Any party reaching an agreement that harms China’s interests will face strong opposition. If that happens, China will firmly respond with reciprocal countermeasures.” — CNBC. This warning comes as the Trump administration is reportedly considering using tariff negotiations as leverage to pressure U.S. allies into limiting their trade relations with China.

As the U.S.–China trade war risks spilling over to other countries, global investors are turning increasingly cautious. In this climate, gold remains a strategic safe haven, particularly as capital flows exit equities and other risk assets in search of safety.

Adding symbolic weight to the market mood, President Trump posted on Truth Social yesterday: “The golden rule of negotiation and success: He who has the gold makes the rules.” The quote quickly went viral across trading forums, reinforcing defensive market sentiment and subtly affirming gold’s strategic importance in a time of uncertainty.

Beyond trade concerns, monetary policy remains a key pillar supporting gold’s uptrend. Signs of cooling inflation have quickly reshaped expectations for the Fed’s policy trajectory. The market now leans toward the likelihood of rate cuts beginning in September, or potentially even earlier if economic data continues to soften. In such an environment, gold—typically favored during periods of lower interest rates and reduced opportunity costs—tends to thrive.

In his latest remarks, Fed Chair Jerome Powell struck a cautious tone, acknowledging strong March retail sales but emphasizing that economic growth remains fragile. He reiterated the Fed’s readiness to act if more definitive signs of slowdown emerge. These dovish signals have further strengthened the belief that a rate-cutting cycle is approaching—a historically bullish development for gold.

Finally, geopolitical tensions continue to pose underlying risks. The war between Russia and Ukraine shows no signs of de-escalation, while conditions in the Middle East remain volatile with an elevated risk of regional spillover.

The confluence of trade conflict, rate cut expectations, and geopolitical uncertainty has propelled gold to its latest all-time high near $3,385/oz. If no major policy or economic shocks emerge to reverse the trend, and if current drivers remain intact, gold could continue climbing toward key psychological levels such as $3,400 and $3,450 in the near term.