Crude Oil, Gold Outlook: Trade Wars Begin

Key Events:

• OPEC moves toward a supply hike in April; oil drops below $68
• Trade wars threaten market confidence and economic growth
• Chinese Manufacturing PMI rises, while U.S. ISM Manufacturing PMI declines
• U.S. Non-Farm Payrolls set to be a major volatility catalyst amid trade wars and geopolitical tensions

Trade Wars Begin on Schedule

The U.S. has imposed 25% tariffs on Canadian and Mexican goods and 20% total tariffs on Chinese imports, affecting approximately $1.5 trillion in annual trade, according to Bloomberg. Retaliatory measures followed swiftly: Canada implemented phased levies on $107 billion worth of U.S. goods.

China imposed tariffs of up to 15% on American agricultural exports. With market tensions rising and additional tariffs scheduled for April, inflation risks are increasing, and economic sentiment is deteriorating.

What About Ukraine?

Defense sectors are now in focus. Following the unresolved mineral deal and ongoing disputes between Trump and Ukraine, Trump has withdrawn all U.S. military defenses from Ukraine. Meanwhile, the EU has proposed €150 billion in new loans for European defense.

These geopolitical tensions could slow oil’s steep downturn and further boost gold’s safe-haven appeal until a resolution is reached.

OPEC Leans Toward an Output Hike

According to Bloomberg, the OPEC group, led by Saudi Arabia and Russia, plans to increase supply quotas by 138,000 barrels per day in April. This marks the first in a series of production revivals that will restore a total of 2.2 million barrels per day by 2026, following more than two years of supply cuts.

Amid growing concerns over tariffs and economic instability, expectations of a supply surplus have put additional downward pressure on oil prices.

Key Economic Indicators

Beyond trade wars, geopolitics, and OPEC, the U.S. ISM Manufacturing PMI—a key economic growth indicator—dropped from 50.9 to 50.3 on Monday. This decline has further dampened economic confidence, exacerbating concerns over inflation and tariffs, and sending the U.S. Dollar back toward the 106.20 level.

While weaker economic sentiment is weighing on oil demand and increasing bearish pressure, uncertainty surrounding inflation and economic growth is once again driving gold’s safe-haven appeal. Friday’s U.S. Non-Farm Payrolls report will be crucial in shaping inflation and growth expectations.

Technical Analysis: Quantifying Uncertainties

Crude Oil Outlook: 3-Day Time Frame – Log Scale

Source: Tradingview

As concerns over supply surpluses and weakening demand dominate market headlines, crude oil is retreating toward its four-year support zone, eyeing levels between $66 and $63.80. A decisive close below $63.80 could open the door to four-year lows, with potential declines toward $60 and $55.

On the upside, if oil holds above the recent $67.50 support level, short-term gains are expected to be capped at $68.80, $70.50, and $73.

Gold Outlook: 3-Day Time Frame – Log Scale

Source: Tradingview

Gold’s recent rebound above $2,920 per ounce puts its bearish engulfing pattern into question, as the metal once again targets record highs between $2,940 and $2,955. With intense inflation concerns, trade wars, and ongoing geopolitical tensions involving the U.S., EU, Russia, and Ukraine, safe-haven demand may continue to support gold.

A sustained breakout above $2,950 is required to confirm another leg higher toward the $2,990–$3,000 zone and, eventually, $3,050.

On the downside, if gold fails to hold above $2,930, a deeper retracement could unfold, especially given the RSI’s pullback from extreme overbought levels and the weekly bearish engulfing pattern. A decline below $2,880 and $2,840 could reinforce a deeper correction toward the $2,800 and $2,760 zones.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves