Gold Hits All-Time Highs as Expectations of Tariff War Escalate
On Monday, China cautioned other countries against entering broader economic agreements with the US that might come at Beijing’s expense. US President Donald Trump is pursuing a negotiation strategy as he seeks tariff reductions or exemptions from various countries.
Due to trade tensions, the US dollar slipped towards a three-year low, boosting gold’s ( XAU/USD ) appeal to investors holding other currencies. At the same time, Trump harshly criticised Federal Reserve (Fed) Chair Jerome Powell last Thursday as Trump’s team seeks the possibility of removing Powell from his position.
On the geopolitical front, Russia and Ukraine accused each other of thousands of violations of the one-day Easter ceasefire declared by President Vladimir Putin. The Kremlin stated there were no plans to extend the temporary halt in frontline combat.
"Fundamentally, markets are pricing in heightened geopolitical risks, driven by US tariff tensions and stagflation concerns, while resilient central bank demand offers an added tailwind for prices as well", said IG market strategist Yeap Jun Rong.
"The next potential milestone for gold could be around the $3,500 level, though positioning may appear crowded in the near term, and technical indicators suggest near-term overbought conditions", Rong added.
XAU/USD rose by 1.5% during the Asian and early European trading sessions. Today, the calendar is relatively uneventful due to Easter Monday. Still, traders should continue to monitor any developments around global trade tariffs. If the Trump administration’s rhetoric continues to threaten China, XAU/USD will continue to climb towards new highs. Key levels to watch are resistance at $3,400 and support at $3,360.
Euro Benefits From Weakening US Dollar
The euro ( EUR/USD ) surged by over 1% to above 1.15000 on Monday, setting a high last seen in 2022. It was buoyed by safe-haven demand amid global trade tensions and a weaker US dollar (USD).
Last week, US President Donald Trump ordered an investigation of the possibility of imposing new tariffs on all US critical mineral imports. This marked a significant escalation in US trade tensions with its partners, especially China. Thus, the US dollar slipped towards a three-year low, making the euro more attractive for investors. Meanwhile, White House economic adviser Kevin Hassett stated on Friday that the Trump administration continues to explore the legal grounds for dismissing Federal Reserve Chair Jerome Powell. If Powell is removed from his position, it could have serious implications for the central bank’s independence and global financial markets.
"Powell doesn’t report directly to Trump, so Trump can’t actually fire him. He can only be removed from office under certain procedures, which one would think have a higher barrier... But can the president move the cogs and wheels to undermine the perceived independence of the Fed? Sure, he could", said Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho.
"It’s really a buffet for any US dollar bear... from the heightened uncertainty around the self-harm from tariffs to the loss of faith even prior to the Powell news", Varathan added.
EUR/USD rose during the Asian and early European trading sessions. While today’s official macroeconomic calendar is light, traders should monitor any news regarding global trade tariffs. Further retaliation regarding tariffs from Chinese officials could trigger a significant upward rally in EUR/USD. Key levels to watch are resistance at 1.15300 and support at 1.14000.
British Pound Reaches a Highest Level in Seven Month
On Monday, the British pound ( GBP/USD ) appreciated by 0.7%, reaching 1.33855—the highest since 1 October.
"We’ve had a pretty impressive run of strength for most of the G10 currencies, and so I think we’re just in a bit of a pause phase right now", said Eric Theoret, FX strategist at Scotiabank.
"Our medium-term view’s still bearish for the US dollar, so we’re just seeing this as a bit of a consolidation", he added.
Global trade tensions, particularly involving the US, China, and the eurozone, remain a key risk for GBP/USD. The U.K., as a trade-reliant economy, could face secondary impacts from any escalation in tariffs or supply chain disruptions. Meanwhile, any improvement in US-China trade relations may reduce safe-haven flows, benefiting risk-sensitive currencies like the British pound.
The British pound also remains sensitive to domestic economic conditions. Recent data indicates that the U.K. economy faces challenges: slowing GDP growth, elevated inflationary pressures, and subdued consumer spending. Thus, the Bank of England (BoE) has adopted a cautious tone in its recent statements, signalling a potential pause or end of its rate-hiking cycle. Any signs of a dovish shift—especially in light of weakening economic growth—could weigh down on the pound in the medium term.
GBP/USD moved higher during the Asian and early European sessions. Although trading activity will be relatively subdued today, market participants should monitor any updates about global trade tariffs. A more balanced stance from the US and China could trigger a sharp downside correction in GBP/USD. Furthermore, upcoming speeches from US and Chinese officials later today may trigger additional volatility in USD-related currency pairs. Key technical levels to monitor include resistance at 1.34300 and support at 1.33000.