Gold Nears $3,400 as Safe-Haven Appeal Grows Amid Tariff Concerns

Gold prices surged for the second consecutive day on May 6, 2025, climbing 1.5% to approach the significant $3,400 per ounce level. Spot gold traded at $3,366.68, up $4.72 (+0.14%) in early trading, after reaching a two-week high of $3,357.63.

Investors flocked to the precious metal following U.S. President Trump’s announcement of new tariff plans. Trump revealed intentions to impose 100% tariffs on foreign-produced films and plans to unveil pharmaceutical tariffs within the next two weeks.

These developments have heightened market anxiety and boosted demand for safe-haven assets. The upcoming Federal Reserve policy meeting scheduled for tomorrow adds another layer of uncertainty.

Traders eagerly await the Fed’s decision and comments from Chair Powell for insights into future interest rate trajectories. The central bank has maintained its policy rate within the 4.25-4.50% range since December 2024.

China’s return from a five-day holiday further strengthened demand. Analyst Priyanka Sachdeva from Phillip Nova noted that “dip buyers returned to markets as China reopened,” though cautioned that “a stronger dollar today will likely keep a lid on further upward momentum for gold.”

In India, gold prices showed remarkable gains across major cities. The 24-carat gold rate reached ₹96,360 per 10 grams, jumping ₹1,300 from the previous day’s close. Mumbai recorded 24-carat gold at ₹9,611 per gram, while Chennai saw prices surge by ₹1,000 per sovereign to ₹72,200.

Technical analysts point to gold breaking above key resistance levels while trading in a small uptrend channel. The $3,200 level serves as crucial support, with the 50-Day EMA near $3,140 providing additional backing. The recent price action follows April’s exhaustion candle that suggested potential consolidation.

Trading volumes reflect growing interest, with spot gold contracts seeing a 15% spike in activity. This surge underscores increasing demand amid global economic uncertainties and inflationary pressures.

The metal’s bullish momentum comes despite reaching overbought conditions on the Relative Strength Index. Market participants note that gold’s positive technical formation on the short-term basis supports continued upward movement.

Silver prices also benefited from the positive sentiment, rising 2.38% to ₹96,740 in domestic Indian markets, with varying rates across major cities.

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