Gold has kicked off the second quarter with yet another surge to fresh record highs, following a blistering first-quarter rally of 19%, which saw it smashing through milestone after milestone, including the symbolic $3,000 mark. This morning, European equity indices were showing signs of life after Wall Street’s late recovery last night. However, at the time of writing, stocks were coming off their earlier highs. Risk sentiment remains fragile ahead of Donald Trump’s much-anticipated tariff announcement on Wednesday, set to take place in the White House Rose Garden. The scope of these tariffs remains unclear, leaving investors hesitant to commit to riskier assets, keeping the gold forecast positive for now. This lingering uncertainty has kept the metal well-supported, with prices charging into uncharted territory with barely a pause for breath. A significant pullback before Wednesday seems unlikely, but once the dust settles, we could see gold take a breather—especially if Trump adopts a softer stance. Much of the tariff-related fear is arguably priced in by now, but whether that translates into calmer markets remains to be seen.

Market sentiment remains fragile ahead of “Liberation Day”

Trump’s latest tariff escalation has rattled global markets, with US equities extending their slide last week. The S&P 500 dropped another 2% on Friday after fresh levies on imported vehicles were announced. The volatility continued into Monday, as initial losses gave way to a late-session rebound, trimming the worst of the damage. Index futures were a little higher earlier, before turning lower again – suggesting more losses could be on the way for stocks later.

Now, all eyes are on Trump’s next move—a sweeping set of new tariffs, set to be unveiled on Wednesday, which he has proudly dubbed “Liberation Day.” The premise? That hiking tariffs will boost domestic industry and create jobs. The reality? Investors fear it could stoke inflation while simultaneously weighing on economic growth—a toxic mix for an already shaky market.

Can gold sustain its rally later in the week?

For now, gold continues to benefit from haven demand amid the turbulence in equities. But what about the gold forecast: how much higher can it go before an inevitable correction? Many traders had $3,000 as their key psychological target. Now, with prices sitting around $3,150 after a four-day rally, the prospect of profit-taking is certainly on the table. However, profit-taking alone is unlikely to trigger a sharp downturn. But there are a few other reasons why gold could potentially head lower.

The first thing to consider is the equity markets and how they have been positively correlated with gold prices in the last several years. So far, the relatively small correction in equity markets has meant gold has been able to retain its haven appeal. That said, a steeper sell-off in stocks could lead to forced liquidations of profitable gold positions to free up margin—a potential source of downside pressure for the metal.

Fundamentally, several risks could challenge gold’s advance, though none have materialised yet. A de-escalation of geopolitical tensions—such as Trump delivering on his promises regarding Ukraine and Gaza—could sap some of gold’s safe-haven demand. At present, however, such a scenario seems distant.

Additionally, sustained high prices might encourage miners to ramp up supply, though production increases take time to materialise. Similarly, central banks—key buyers in recent years—could reduce their gold purchases if prices remain elevated.

Gold forecast: Technical analysis and levels to watch

Source: TradingView.com

From a technical perspective, the price of gold remains in a strong uptrend, consistently printing higher highs and higher lows. Overbought conditions on multiple timeframes have done little to slow the momentum, reinforcing the old adage that price action trumps lagging indicators. Until the uptrend structure breaks, the mantra remains: buy the dip.

Here are the key support levels to watch:

• $3,127 – Yesterday’s high, serving as the first line of defence for bulls.
• $3,086 – Last Friday’s high and a key recent resistance-turned-support level.
• $3,032-$3,057 – The last area of resistance before the breakout, making this a critical zone for dip buyers.
• $3,000 – A major psychological level. Holding above this confirms bullish control, but a break below could lead to deeper liquidations.

As for resistance? With gold trading at all-time highs, there are no obvious levels to monitor beyond round numbers—$3,200, $3,300, and so on. Until there’s a structural shift, the path of least resistance remains up.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R