Daily Price Outlook
Gold (XAU/USD) started to lose some of its gains but remains consolidating near its all-time peak of $2,865. However, the modest decline could be linked to the renewed strength of US dollar.
Although, the losses in the gold could be short-lived amid escalating concerns over a potential US-China trade war, triggered by President Donald Trump's tariffs. As a result, investors tend to favor gold as a safe-haven asset.
In addition, expectations for the Federal Reserve (Fed) to maintain its dovish stance and cut interest rates in 2025 have further boosted gold's appeal. The drop in US Treasury bond yields has also made gold more attractive when compared to interest-bearing assets.
Despite these bullish drivers, the positive sentiment in the stock markets has limited fresh buying interest in gold. Traders are also cautious, with gold appearing slightly overbought on the daily chart.
Gold Prices Surge Amid Economic Data and Rising US-China Tensions
Gold's impressive rally is also fueled by US economic data and the growing US-China trade war. On the data front, the ADP report showed a slightly stronger-than-expected growth of 183K private-sector jobs in January, surpassing the previous month's increase of 176K.
However, this positive news was overshadowed by a disappointing ISM Services PMI report, which dropped to 52.8, signaling slower economic growth. In response, US Treasury yields plummeted to their lowest level since mid-December, increasing the appeal of gold as a safe-haven asset.
Furthermore, expectations that the Federal Reserve will cut interest rates twice in 2025 added downward pressure on the US Dollar, sending it to a one-week low and further supporting gold’s bullish momentum.
US-China Trade Tensions Fuel Gold's Bullish Momentum as Investors Seek Safe-Haven Asset
Apart from this, the ongoing US-China trade tensions are also influencing the gold market. China recently announced a 15% tariff on US coal and liquefied natural gas (LNG) imports, and a 10% tariff on crude oil, farm equipment, and some automobiles.
In addition to these tariffs, China has imposed export controls on certain key minerals like tungsten and tellurium, which are essential for various industries.
These actions are fueling concerns about further escalation in trade conflicts, adding uncertainty to the global economic outlook. As a result, investors are turning to gold as a safe-haven asset, which has helped support its bullish trend.
The trade war is pushing Chinese manufacturers to relocate production to other countries, including the Middle East, to avoid US tariffs. This shift in production is likely to impact global supply chains and could lead to higher costs for consumers in the US.
With the uncertainty surrounding trade policies and economic conditions, gold is seen as a reliable investment. The precious metal continues to attract investors looking for a hedge against the ongoing geopolitical and economic risks, keeping its prices supported and potentially leading to further gains in the future.
Key US Data and Market Outlook for Gold
Looking ahead, traders are focusing on key US employment data for insights into the Fed's future actions. The release of the Nonfarm Payrolls report on Friday will be a key indicator of the strength of the job market and potential future Fed moves.
Additionally, the release of Weekly Initial Jobless Claims data on Thursday will offer further clues about the labor market's health.
For now, the fundamental factors remain supportive for gold. Economic uncertainty, a dovish Fed, and lower Treasury yields continue to create a favorable backdrop for the precious metal.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2868.17, showing slight upward movement (+0.03%) as traders assess key technical levels. Despite its minor gains, the metal remains below the pivot point at $2880.17, suggesting a cautious sentiment among investors.
Immediate resistance is located at $2897.72, followed by a stronger level at $2915.92. A break above these zones could signal renewed bullish momentum, pushing gold toward fresh highs. However, failure to sustain above the pivot point at $2880.17 may invite selling pressure.
On the downside, immediate support is noted at $2859.42, with stronger support levels at $2840.59 and $2815.69. These levels coincide with recent consolidation zones and could provide a buying opportunity if prices dip.
From a technical standpoint, gold is hovering near its 50-day EMA at $2826.99, reinforcing a potential floor for the metal. If XAU/USD remains above this level, a bounce toward resistance becomes more likely. However, a sustained break below the $2840.59 support could accelerate declines, putting the focus on the $2815.69 mark.
Given the technical structure, a sell setup is favored below $2873, with a take profit target at $2847 and a stop loss at $2890 to manage risk. Short-term traders should closely watch price action around the pivot zone, as a failure to reclaim $2880.17 could reinforce a bearish outlook.
Related News
- USD/JPY Price Analysis – Feb 06, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.