Daily Price Outlook
During the first half of the European session on Monday, the Gold price (XAU/USD) managed to recover some of its losses but remained bearish around the $2,799 level.
However, the precious metal found some support from concerns about the potential economic fallout from US President Donald Trump's trade tariffs. These tariffs, along with fears of a trade war, have made investors more cautious and less willing to take risks.
As a result, Gold, which is considered a safe-haven asset, has been benefiting from the uncertainty. Moreover, there are speculations that Trump's protectionist policies could lead to higher inflation, further strengthening Gold’s appeal as a hedge against rising prices.
Meanwhile, the US dollar has bounced back close to a two-year high, driven by Trump's decision to impose tariffs on Canada, Mexico, and China. On top of this, there are growing expectations that the Federal Reserve may hold off on cutting interest rates this year due to rising prices and strong consumer spending.
This has limited Gold’s gains. Gold remains supported by global trade tensions, the stronger US Dollar and potential Fed actions are keeping it from fully recovering.
Impact of US Tariffs and Economic Data on Gold Prices and the US Dollar
On the US front, the broad-based US Dollar (USD) spiked after President Donald Trump imposed tariffs on imports from Canada, Mexico, and China, which had a negative impact on Gold prices. The US Commerce Department's report showed that inflation ended 2024 on a strong note, with consumer spending rising in December.
This led to expectations that the Federal Reserve might hold off on more aggressive rate cuts. The Personal Consumption Expenditures (PCE) Price Index rose to 2.6% year-on-year in December, while the core PCE gauge also climbed to 2.8%, matching expectations.
Investors are concerned that Trump's tariffs could worsen inflation in the US, which could make the Federal Reserve more likely to take a hawkish stance, weakening Gold further. US Treasury Secretary Scott Bessent mentioned that the tariffs would strengthen the US Dollar and continue to push inflation higher.
However, Trump's calls for lower interest rates and the possibility of more policy easing by the Fed could keep US Treasury bond yields low, which might prevent Gold from falling too much. Traders are now focusing on upcoming US economic data, like the ISM Manufacturing PMI, to gauge the near-term direction for Gold.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,783.87, down 0.50% as bearish pressure weighs on the metal amid a stronger U.S. dollar and shifting market sentiment.
The price action remains confined within a consolidation range, with the pivot point at $2,773.05 acting as a critical juncture for short-term direction.
The 50-EMA at $2,765.63 provides dynamic support, slightly below the current price, reinforcing the importance of the $2,772 level.
A sustained move above $2,772 may trigger bullish momentum, targeting immediate resistance at $2,809.05. If buying pressure strengthens, the next upside barriers are $2,830.19 and $2,848.35.
Conversely, failure to hold above the pivot could expose gold to immediate support at $2,744.98. A deeper decline may find stability around $2,730.45, with $2,703.37 marking a crucial downside target if bearish momentum accelerates.
The technical setup suggests a cautious bullish bias above $2,772, with a recommended entry at this level, targeting $2,808 for profit-taking.
A stop loss at $2,754 helps manage downside risk. However, if gold breaches the 50-EMA convincingly, the bias could shift bearish, increasing the likelihood of testing lower supports.
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