Gold (XAU) rallies amid market speculation on "Liberation Day" tariffs, with investors weighing potential impacts on price momentum.

Gold (XAU) hit fresh highs above $3,100 per ounce as markets brace for President Trump's upcoming tariff announcements, with concerns about a potential global trade war driving safe-haven demand.

XAU Rally Intensifies as Trump Signals Widespread Tariff Implementation

Gold (XAU) prices advanced to fresh highs following a gap up over the weekend, with the precious metal continuing its excellent performance in 2025. The stark rise above the $3,000/oz handle has been fueled by President Trump's recent comments, which suggested his upcoming tariffs might not be limited to just a few countries with major trade imbalances.

Speaking on Air Force One, Trump indicated a more comprehensive approach to tariffs that could potentially affect all trading partners. This development has intensified market concerns about a global trade war that might trigger a recession, further boosting gold's appeal as a safe-haven asset.

According to the current timeline, Trump is set to receive tariff recommendations on Tuesday, announce initial rates on Wednesday, and follow up with auto tariffs on Thursday. These announcements, dubbed "liberation day" tariffs, have already been partially priced into gold's current valuation.

XAU Faces Potential "Buy the Rumor, Sell the Fact" Scenario

As gold (XAU) continues its impressive 2025 rally, questions are emerging about how sustainable the current price levels are. There's growing concern that the upcoming "liberation day" tariff announcements could trigger a "buy the rumor, sell the fact" reaction in the gold market.

Markets currently appear convinced that the tariffs to be announced over the coming days will be widespread and received negatively. However, the Trump administration has demonstrated a lack of consistency in the past, often saying one thing and delivering something completely different, or walking back initial proposals at least partially.

Any such move this time around could lead to a selloff in the precious metal. That said, whether such a potential correction would be sustainable is highly doubtful given the broader economic concerns and persistent safe-haven demand.

XAU Benefits as Recession Risks and Inflation Worries Mount

Gold (XAU) continues to find support from growing recessionary fears and inflation concerns. Many economists warn that widespread tariffs could hurt the U.S. economy while also limiting the Federal Reserve's ability to lower interest rates due to short-term inflation pressures.

Goldman Sachs has recently increased its U.S. recession probability estimate to 35%, up from 20% previously. The investment bank expects Trump to announce 15% reciprocal tariffs on all trading partners on April 2, a move that would significantly increase economic risks.

Friday's economic data further highlighted these concerns, with core inflation rising more than expected in February, while consumer spending fell short of expectations. These developments continue to lend supporting hand to safe-haven demand, directly benefiting gold prices.

The combination of inflation worries and economic growth concerns creates an ideal environment for gold (XAU), which traditionally performs well during periods of economic uncertainty and as a hedge against inflation.

XAU Technical Analysis Points to Continued Bullish Momentum

From a technical analysis standpoint, gold (XAU) prices have created fresh highs today and found resistance around the $3,125 handle. Looking at the two-hour chart, immediate support may be found at $3,100 before the Friday close around the $3,083 handle comes into focus.

On the upside, a recovery from current levels needs to push beyond the $3,125 handle if bulls are to regain momentum. Such a move has the potential to develop in the Asian trading session as gold continues to be a stellar performer in 2025.

The technical support levels to watch include:

1. $3,100
2. $3,083
3. $3,071

Meanwhile, resistance levels are established at:

1. $3,125
2. $3,150
3. $3,175

Market Sentiment Remains the Key XAU Driver Amid Tariff Uncertainty

Given the scenarios presented above, the week ahead looks to be a volatile one with significant whipsaw price action expected for gold (XAU). Overall, recent developments suggest that bulls remain in charge of the gold market. What we have observed lately is that overall market sentiment seems to be the biggest driving force behind gold's price movements.

As investors navigate the uncertainty around Trump's tariff announcements and their potential economic impact, gold is likely to remain responsive to shifts in risk sentiment. The precious metal's traditional role as a safe-haven during periods of geopolitical and economic uncertainty continues to support its upward trajectory.

However, traders should remain cautious of potential short-term corrections, particularly if the actual tariff announcements differ significantly from what markets have already priced in. Despite this risk, the broader fundamentals supporting gold (XAU) remain strong, suggesting that any pullbacks might present buying opportunities for those with a longer-term bullish outlook.