Gold (XAU/USD) is gaining momentum as fresh tariffs drive inflation higher and weigh on the U.S. dollar. Technical patterns, along with the gold-to-silver ratio, point toward a potential breakout targeting the $4,000–$6,000 range in the medium term.
Tariffs Spark Inflation Risks and Boost Gold’s Safe-Haven Appeal
U.S. tariff revenues hit a record $27 billion in July 2025, with annual receipts projected to exceed $300 billion. While this strengthens government finances, tariffs act like indirect taxes—raising import costs, pressuring household budgets, and fueling inflation.
Historically, gold performs well in such environments, serving as a hedge against rising prices and policy uncertainty.
Persistent Inflation Keeps Gold Bulls in Control
Spot gold is consolidating below the $3,450–$3,500 resistance zone. A breakout above these levels could open the door to $4,000 by year-end. Inflation data, including sticky Core PCE above the Fed’s 2% target and higher producer prices, confirms persistent price pressures.
The Federal Reserve faces a dilemma: cutting rates risks credibility while keeping them high risks recession. This uncertainty strengthens gold’s long-term appeal.
Dollar Weakness Clears Path for Gold Rally
The U.S. Dollar Index is trending lower toward the 96 support level, with further downside likely if confidence in U.S. fiscal and monetary policy erodes. A sharp drop below this level could accelerate gold’s push above $3,500.
Historical Patterns Suggest Extended Upside
Gold’s long-term chart highlights recurring bullish cycles. The 1970s inflation surge propelled gold to record highs, while the breakout above $2,075 in 2023 set the stage for the current uptrend.
With consolidation building below $3,500, the technical structure suggests price compression—often a prelude to a major breakout. Long-term projections point toward the $6,000 mark if momentum continues.
Gold-to-Silver Ratio Adds Bullish Confirmation
The April 2025 peak in the gold-to-silver ratio at 105.58 historically signals turning points favoring precious metals. The ratio now suggests silver strength, which typically precedes gold rallies. A sustained move lower in the ratio could accelerate gold’s rise.
Outlook: Gold Ready for the Next Leg Higher
Gold’s consolidation between $3,000 and $3,500 presents a classic bullish setup. Inflationary pressures, widening deficits, and weakening dollar fundamentals strengthen the case for higher prices.
A confirmed breakout above $3,500 could propel gold toward $4,000 in the short term, with potential to reach $6,000 in the longer run. Corrections near $3,000–$3,100 remain attractive buying opportunities for both traders and long-term investors.
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