In today’s economy, with high debt, stubborn inflation, and slow growth, investing more in gold and defensive sectors is a safer choice. Expensive tech stocks look less appealing, and long-term bonds should be avoided.
Advertisement
Advertisement
Gold Extends Bullish Momentum as Trade Tensions Escalate and Growth Weakens
By:
Key Points:
- Gold continues to climb as the renewed U.S.–China trade war, rising inflation, and weak global growth fuel strong safe-haven demand.
- Technical patterns indicate a sustained long-term bullish trend, supported by strong momentum and renewed investor confidence in precious metals.
- Escalating geopolitical tensions, fiscal expansion, and policy uncertainty continue to favour gold as a hedge against inflation and market instability.
Gold (XAU) prices continue to increase without any correction at the resistance levels due to increasing global tensions. The renewed U.S.–China trade war has shaken markets and driven investors toward safe-haven assets. China’s expansion of export controls on rare earth materials and the U.S. decision to impose new tariffs have intensified fears of an economic showdown.
Moreover, stubborn inflation and slowing global growth increase the demand for precious metals. The gold price has hit the target of $4,000 and shows positive consolidation, which indicates continued bullish momentum. This article presents the fundamental drivers, market risks, and long-term technical outlook for gold amid the escalating trade conflict.
Gold Surge as U.S.–China Trade Tensions Escalate
The trade crisis between the United States and China intensified. China expanded its export controls on rare earth elements, adding five new materials and tightening scrutiny on semiconductor users. The move came just two weeks before a planned meeting between President Xi Jinping and President Donald Trump at the APEC summit in South Korea.
Beijing’s latest restrictions also target refining technologies and impose compliance requirements on foreign producers using Chinese materials. The U.S. administration quickly retaliated with new tariffs and technology export limits, reigniting fears of a broader trade confrontation.
President Trump described China’s move as a “real surprise” and questioned whether the upcoming meeting should proceed. This escalation rattled global markets, boosting demand for traditional safe-haven assets.
Trump’s Tariffs Shake Markets as Treasury Yields Drop
After markets closed on Friday, President Trump announced a 100% tariff on imports from China and new controls on any critical software. The announcement sent shockwaves through financial markets. Treasury yields dropped sharply, and the US dollar weakened, signalling renewed risk aversion among investors.
The chart below shows that the 10-year Treasury yield is approaching long-term support near 4.0%. This reflects expectations that investors will shift toward safer assets. Moreover, the inflation remains sticky at 3.0%, and a balanced yield curve would keep short-term rates near 4.0%.
Moreover, the U.S. Dollar Index is rebounding from long-term support near the 96 level but remains weak. Strong resistance is seen at the 100.50–101 zone, where the 200-day SMA converges. However, a break below the 96 level would trigger intense selling pressure, potentially targeting the 90 level.
Furthermore, growing trade tensions are threatening economic growth, and the Federal Reserve may be forced to cut rates. This move could reignite inflationary pressures and further enhance gold’s appeal.
U.S. Consumer Confidence Falls to Pandemic Lows Amid Inflation Fears
According to the latest University of Michigan survey, consumer sentiment has dropped sharply. The chart below shows that the confidence levels in October fell to lows not seen since the pandemic.
Moreover, the current economic conditions are now worse than when President Biden left office. These conditions heighten the political stakes ahead of the 2026 midterm elections.
The falling expectations, rising inflation concerns, and trade war fears have collectively weighed on household optimism. This erosion in confidence supports continued demand for defensive assets such as gold and silver (XAG), while risk appetite across equities remains fragile.
Trade War and Fiscal Expansion Fuel Inflation
The U.S. and China are now caught in a modern version of the “Thucydides Trap,” where a leading power and a rising rival are likely to clash. A direct war is unlikely, but both countries are using economic pressure to compete for global control.
The U.S. holds a military advantage, but China’s strength in manufacturing and resources gives it strategic leverage. Trump’s transactional style contrasts with Beijing’s long-term planning, adding uncertainty to how this economic standoff will play out.
The consequences will include larger fiscal spending programs, suppressed interest rates, and persistent inflation. These conditions have historically favored precious metals. The shift away from U.S. Treasuries toward gold as a global reserve hedge may accelerate as investors seek protection from policy instability.
Gold’s Parabolic Uptrend Strengthens Amid Geopolitical and Economic Uncertainty
Long-Term Momentum Builds as Gold Extends Its Multi-Year Bullish Trend
Gold has been trading in a parabolic uptrend for several decades, and this move has intensified over time. The yearly chart below shows that gold formed a major bottom in 2015, which triggered a strong upward surge.
Since then, prices have continued to advance each year, with bullish momentum accelerating after 2022. Gold gained around 13% in 2023 and more than 27% in 2024. This momentum was further increased in 2025 as the price had gained over 50% by October 2025.
With three months remaining in 2025 and ongoing economic and geopolitical tensions, the rally shows no signs of easing. These crises continue to intensify, supporting gold’s long-term rise.
From a technical perspective, the parabolic price structure suggests that annual gains could continue to compound strongly. If momentum persists, gold’s next leg higher could extend well beyond current levels, offering significant upside potential for long-term investors.
Long-Term Momentum Builds as Gold Extends Its Multi-Year Bullish Trend
The escalating geopolitical and trade risks have strengthened the bullish outlook for gold. A decisive breakout above recent highs would likely push gold further higher.
Gold’s long-term uptrend appears intact as investors seek protection from currency debasement and global policy shocks. To measure the gold price target, the yearly chart below shows the formation of a rising wedge pattern. This pattern extends from the 1980s high to the breakout that occurred in 2024.
The chart highlights that gold marked a bottom in 1976 at around $100 and then surged by over 700% to reach a high in 1980. Similarly, from the 2001 bottom at $254.10, the price again rallied more than 700% to peak at $1,921 in 2011.
After a long consolidation phase, gold broke higher in 2024. If the same 700% gain is applied from the 2016 bottom, the projected target would range between $9,000 and $10,000.
Therefore, gold may continue to move higher toward the next major target beyond the $10,000 region. This level could act as the first significant resistance in the current bull cycle. However, the overall structure suggests that further gains are likely in the gold market over the coming years.
Gold-to-Silver Ratio Signals Strong Silver Breakout and Gold Upside
The gold-to-silver (XAU-XAG) ratio is a valuable tool to gauge the next move in the gold market. When the ratio declines, it often signals that both metals are in a strong bullish trend. During such periods, silver leads gold in price performance.
Currently, the gold-to-silver ratio is approaching strong support within an ascending channel pattern, as shown in the chart below. A confirmed break below the key 79 level would complete a bear flip pattern, indicating a potential drop toward the 64 level.
This move would likely coincide with a strong rally in silver prices, possibly breaking above the key $50 level. This breakout in silver would support continued strength in the gold market as well, potentially driving gold prices higher and reinforcing the long-term momentum toward the $10,000 region.
Market Risks: Inflation, Policy Shifts, and Geopolitical Tensions Threaten Stability
Trade tensions between the U.S. and China may escalate further. Any breakdown in diplomatic talks or additional retaliatory measures could disrupt global supply chains and trigger sharp market reactions. Sudden policy changes, such as tariff increases or export restrictions, may create uncertainty and short-term volatility across commodity and equity markets.
The Federal Reserve faces a dilemma. Cutting rates to support growth may worsen inflation. However, holding rates steady could risk a deeper slowdown. The sticky inflation near 3.0% and rising fiscal spending may pressure bond markets and undermine confidence in monetary policy. This environment may fuel demand for gold, but it also increases the risk of financial instability.
Moreover, the falling consumer sentiment signals weak household confidence in the economy. If inflation stays elevated and wage growth remains soft, spending may decline. At the same time, political tensions ahead of the 2026 midterm elections could limit the government’s ability to respond effectively. These overlapping risks could hurt corporate earnings and lead to broader market stress, even as gold benefits.
Final Thought: Safe-Haven Demand and Trade Tensions Support Bullish Momentum
Gold continues to benefit from rising geopolitical and economic uncertainty. The escalation of the U.S.–China trade war, persistent inflation, and weakening consumer sentiment all support a defensive investment stance. Precious metals offer protection as policy risks and market volatility increase.
The long-term chart for gold shows a parabolic move, with prices rising steadily while respecting key short-term resistance levels. This surge reflects strong buying driven by geopolitical tensions and may extend toward the long-term target of $10,000. Investors may continue to buy on dips to capture potential new highs, as the strong yearly candle for 2025 suggests even greater momentum in 2026.
As global power struggles and fiscal expansion reshape the economic landscape, gold remains a key asset for preserving value and managing risk.
About the Author
Muhammad Umairauthor
Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.
Advertisement