Is XAUUSD due for a pullback?

• Gold up ~9% in 2025, hitting new record highs
   
• Trade tensions fueling inflation, boosting safe-haven demand
   
• Tariffs on China active, Mexico/Canada delayed
   
• RSI overbought, signaling potential pullback

Gold has rallied over 9% for the first 5 weeks in 2025.
 

Gold has achieved a remarkable milestone, reaching a new all-time high in price every single trading day since it broke through the previous record of $2,790.17.
 

This powerful upward momentum is directly tied to the escalating trade tensions and the growing concern that they will drive inflation even higher.
 

In times of soaring inflation, investors increasingly flock to gold as a safe haven.

It is crucial to remember that President Trump initiated a significant policy shift by imposing a 25% tariff on goods from Mexico and Canada, alongside a 10% tariff on Chinese imports.

While the tariffs on Mexico and Canada have been postponed for a month, the tariffs on China are already in effect, prompting an immediate retaliatory response from China.

With the ADP non-farm employment change and PMI data set to be released at 13:30 and 14:45 GMT, respectively, we are likely to see heightened volatility in gold (XAUUSD).

From a technical standpoint…
 

The Relative Strength Index (RSI) reveals that XAUUSD is currently in the overbought territory.

This scenario significantly increases the likelihood of a pullback, as gold bulls (those looking to see gold rally) may begin to secure profits.

Such profit-taking could trigger a decline in both gold prices and the RSI, creating a compelling case for potential market corrections.

XAUUSD bears, those looking to see the shiny metal decline could pay attention to the following potential support levels:

• $2,790.17 – November 1st, 2024 high
   
• $2,744.05 – 21-day simple moving average

On the other hand Gold bulls may have their sights set on the record $3,000 - psychologically significant level if XAUUSD continues to push higher.