Gold attracts risk-off flows as XAU/USD eyes $3,000

Sellers have started to challenge the recent rally in gold as it pushes into overbought territory. The precious metal has been trading stronger over the past week, driven by safe-haven demand in response to escalating trade tensions spurred by Trump’s tariff policies. 

On Wednesday, XAU/USD came within 20 points of the $2,900 mark before sellers capitalized on weakening momentum. While Thursday’s trading bias appears bearish, the lack of significant follow-through suggests a technical correction rather than a reversal. Both short-term and long-term momentum remain bullish.

Some buyers may also be cashing out some profits as they anticipate the ascent to $3,000 could pose some challenges. This level has been a widely discussed psychological milestone, and as such, heightened volatility is expected around it. 

Gold (XAU/USD) daily chart

Past performance is not a reliable indicator of future results.

Market Drivers: Trade War and Yields

Concerns about a potential US-China trade war and the broader economic impact of Trump’s tariff policies have driven investors toward safe-haven assets like gold. Additionally, a recent decline in US Treasury yields has further supported the precious metal, as lower yields reduce the opportunity cost of holding non-yielding assets like gold.

Upcoming Economic Data and Gold’s Outlook

Looking ahead, investors will closely monitor upcoming US economic data releases. Trump’s tariff measures are expected to drive short-term inflation higher, potentially exerting downward pressure on gold if bond yields and the US dollar strengthen. However, if protectionist policies weigh on economic growth, the Federal Reserve could shift toward rate cuts, which would likely fuel further upside momentum in gold. A weakening growth outlook typically Favors gold, given its role as a hedge against economic uncertainty. 

In the near term, bullish traders are likely to test the $3,000 level despite resistance. Friday’s release of the January jobs data could provide a key directional cue—softer employment numbers could reinforce bullish momentum, while stronger data might trigger a deeper pullback. Additionally, next week’s CPI report could introduce short-term volatility, particularly if inflation figures deviate from expectations.

For now, XAU/USD remains in an upward trajectory, with any dips likely to be seen as buying opportunities.