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Highlights
- Gold price has soared in the past few months and is hovering at its all-time high.
- It has jumped because of the ongoing rotation to safe havens ahead of Trump’s Liberation Day tariffs.
- Gold has done better than popular assets like the crypto market.
Gold price continued to diverge from the crypto and stock market this week as it soared to a record high of $3,125. It has soared for five consecutive weeks, making it one of the year’s best-performing assets. In contrast, the crypto market continues to implode, with its marke cap plunging by over $1 trillion in the past few months.
Gold Price Surges Ahead of Liberation Day
The price of XAU/USD has continued surging as gold became the most popular safe haven asset this year. Investors are afraid of Donald Trump’s Liberation Day, where he will unveil reciprocal tariffs against most of the US trade partners.
He has already announced other substantial tariffs in the past few weeks. Just last week, he announced 25% tariffs on all imported automobiles and parts. He also announced 25% tariffs on all imported steel and aluminum, and a similar amount for all goods imported from Canada and Mexico.
Gold price is, therefore, rising as investors rush to its safety since it has played a safe haven role in the last decades. Besides, data shows that more countries like Russia, Turkey, and China have continued to boost their gold purchases.
Gold has also jumped as investors anticipate weaker relations between the US and other countries. For example, there are signs that talks between the US and Russia are not going on well, with reports saying that Trump was ‘very angry’ with Putin as the ceasefire negotiations continue.
Therefore, gold price is soaring amid a confluence of bullish catalysts like safe-haven demand, central bank purchases, and rising tensions between the US and other countries.
XAU/USD Technical Analysis
Technicals and trend-following principles show that the gold price will likely keep rising for a while. It has already jumped above the key resistance level at $2,787, the upper side of an ascending triangle pattern.
Gold has remained above the 50-week Exponential Moving Average (EMA). Also, the Average Directional Index (ADX) has jumped to 47, a sign that the momentum is gaining steam.
Therefore, gold prices will likely continue soaring, with the next point to watch being at $3,500. A crash below the support at $2,787 will invalidate the bullish outlook.
Why Crypto Market is Crashing
Interestingly, the gold price surge happened as the crypto market imploded. Bitcoin price has crashed from the year-to-date high of $109,300 to $82,000. Prices of other coins like Ethereum, XRP, and Shiba Inu have plunged.
These coins have plunged because of the rising fear that Trump’s tariffs may lead to a recession in the United States and other countries. Their crash is a sign that Bitcoin is not a safe haven asset as some analysts have argued in the past.
Still, on the positive side, there is a likelihood that Bitcoin and other players in the crypto market will bounce back once the dust settles. That’s because, historically, risky assets do well when there is a recession because the Federal Reserve intervenes by cutting interest rates and implementing quantitative easing.
Frequently Asked Questions (FAQs)
1. Why is gold price soaring to a record high?
2. Why is gold beating the crypto market?
3. Will Bitcoin and other cryptocurrencies bounce back?
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