Gold (XAU/USD) surges near $3,100 as Trump’s auto tariffs and sticky PCE inflation data fuel stagflation fears. Read the latest Gold Price Forecast for March 31, 2025.

Gold Price Forecast: XAU/USD Targets $3,100 Amidst Trump Tariffs and Stagflation Fears

Why is the Gold price rising today? Gold (XAU/USD) is rallying toward record highs near $3,090 as global investors seek safe-haven assets. The surge is driven by escalating trade tensions following President Donald Trump’s announcement of a 25% tariff on imported vehicles, effective April 3. Additionally, hotter-than-expected US inflation data (PCE) has sparked fears of stagflation, weakening the US Dollar and boosting demand for precious metals.

The gold price (XAU/USD) kicked off the trading week with strong bullish momentum, climbing to nearly $3,090 per troy ounce during the early Asian session on Monday, March 31, 2025.

The precious metal is trading within striking distance of a new all-time high as financial markets react to a “double whammy” of geopolitical friction and concerning economic data. Traders are aggressively hedging against the risk of a renewed global trade war and the growing possibility of a US economic slowdown.

In this analysis, we break down the key drivers pushing gold toward the $3,100 psychological barrier and what traders should watch in the upcoming US manufacturing data.

Trump’s Auto Tariffs Ignite Trade War Fears

The primary catalyst for Gold’s ascent is the rapid escalation of global trade tensions. Investors are reacting to President Donald Trump’s latest protectionist measures, which threaten to disrupt global supply chains.

Last week, President Trump announced a 25% tariff on imported cars and light trucks, scheduled to take effect this Thursday, April 3. This aggressive move adds to an existing blanket 25% tariff on steel and aluminum imports.

Global Economic Uncertainty

Markets are also bracing for Trump’s impending notice regarding reciprocal tariffs, expected to be released on Wednesday.

• Safe-Haven Flow: Historically, gold outperforms during periods of trade conflict. As uncertainty looms over the automotive and industrial sectors, capital is fleeing riskier assets (like equities) and flowing into the stability of the yellow metal.

• Recession Risk: Economists fear these tariffs could choke global growth, further supporting the bullish case for XAU/USD.

Sticky Inflation Data Raises Stagflation Concerns

Beyond trade politics, the macroeconomic backdrop remains supportive of higher gold prices. Data released on Friday by the Bureau of Economic Analysis (BEA) painted a worrying picture of the US economy.

The US Core Personal Consumption Expenditures (PCE) Price Index—the Federal Reserve’s preferred inflation gauge—came in hotter than expected for February.

Key PCE Data Points:

• Monthly Growth (MoM): Rose 0.4% in February, surpassing the forecast of 0.3% and accelerating from January’s 0.3%.

• Annual Growth (YoY): Core PCE jumped to 2.8%, up from a revised 2.7% in the previous month.

This report suggests that inflation is “sticky” and entrenched in the US economy. When combined with the growth-dampening effects of aggressive trade tariffs, the US faces a real risk of stagflation (high inflation coupled with low growth). Stagflation is traditionally toxic for the US Dollar (USD) but highly bullish for commodities priced in dollars, such as gold.

Upcoming Catalyst: US ISM Manufacturing PMI

Traders are now turning their attention to Tuesday’s release of the US ISM Manufacturing Purchasing Managers’ Index (PMI) for March. This data will provide the next major clue regarding the health of the US industrial sector.

• Bullish Scenario for Gold: If the PMI misses expectations or shows contraction (below 50.0), it will reinforce recession fears, likely pushing the US Dollar down and propelling XAU/USD above $3,100.

• Bearish Scenario for Gold: A stronger-than-expected report could temporarily boost the Greenback, causing gold to consolidate or pull back slightly.

Conclusion: A Perfect Storm for Precious Metals

The combination of aggressive protectionist trade policies and persistent inflation has created a “perfect storm” for gold prices. As uncertainties mount regarding the global economic outlook for Q2 2025, the yellow metal remains the preferred asset for wealth preservation.

Technically, if bulls can decisively clear the $3,090-$3,100 resistance zone, the door opens for further discovery of record highs.

Frequently Asked Questions (FAQ)

1. Why is gold considered a “safe-haven” asset? Gold is considered a safe haven because it is a physical asset with intrinsic value that does not depend on any specific government or issuer. During times of geopolitical instability, trade wars, or economic downturns, investors buy gold to protect their wealth from stock market volatility and currency devaluation.

2. How do interest rates affect the price of gold? Gold is a non-yielding asset, meaning it does not pay interest or dividends. Generally, when interest rates rise, gold prices fall because investors prefer assets that pay yield (like bonds). Conversely, when interest rates are low or when inflation outpaces interest rates (negative real rates), gold tends to rise.

3. What is the relationship between the US Dollar and Gold (XAU/USD)? Gold and the US Dollar typically have an inverse relationship. Since gold is priced in dollars, a strong dollar makes gold more expensive for foreign buyers, lowering demand and price. A weak dollar makes gold cheaper for international buyers, increasing demand and driving the price up.

4. Who are the largest buyers of gold? Central banks are among the largest holders and buyers of gold. Nations like China, India, and Turkey have been aggressively increasing their gold reserves to diversify away from the US Dollar and stabilize their own economies.

5. What is “stagflation,” and why is it good for gold? Stagflation is an economic condition characterized by slow economic growth (stagnation), high unemployment, and rising prices (inflation). It is favorable for gold because traditional investments like stocks suffer from low growth, while cash loses value due to inflation. Gold preserves purchasing power in this environment.