Daily Price Outlook
Gold price (XAU/USD) prolonged its bullish momentum and remained well bid around $2,898 level, reaching an intra-day high of $2,906.
However, the main drivers behind this rally include the ongoing weakness in the US Dollar, uncertainty surrounding US President Donald Trump’s planned tariffs, and disappointing US Retail Sales data. These factors have provided strong support for gold, pushing it above the critical $2,900 mark.
Despite the Federal Reserve's hawkish stance on interest rates, gold remains resilient. However, the market continues to favor gold due to its safe-haven status in an uncertain global economic environment.
In the meantime, ongoing US-Russia negotiations over the Ukraine conflict have not impacted gold’s bullish momentum, further solidifying its strong outlook.
Weaker US Dollar and Inflation Concerns Bolster Gold's Strength
On the US front, the US dollar remains under pressure, hovering near a two-month low around 106.70. This decline comes amid weaker-than-expected US Retail Sales data, which fell by 0.9% in January, far exceeding the anticipated 0.1% decline.
The disappointing economic data, coupled with lower US Treasury yields, has weighed on the dollar, making gold more attractive to investors.
Furthermore, inflation data has reinforced expectations that the Federal Reserve will delay interest rate cuts. Notably, the US Core Producer Price Index (PPI) rose to 3.6% year-over-year in January, surpassing expectations of 3.3%. Similarly, the US Consumer Price Index (CPI) climbed 3.0% annually, with core CPI rising to 3.3%, both exceeding forecasts.
Therefore, this combination of a weaker US dollar and lower Treasury yields, along with stronger inflation data, has made gold more attractive. Investors are turning to gold as a hedge against economic uncertainty, pushing its price higher.
Impact of Trade Uncertainty and Fed's Stance on Gold Prices
Another key factor influencing gold prices is concern over Donald Trump’s proposed trade policies. The former US president has hinted at imposing new tariffs on countries that tax US imports, raising fears of a trade war. These developments have increased market uncertainty, pushing investors toward safe-haven assets like gold.
Federal Reserve Chair Jerome Powell recently reiterated that policymakers are in no rush to lower interest rates, citing strong job growth and economic resilience. Meanwhile, a Reuters poll of economists indicates that the majority expect at least one rate cut by June, though opinions remain divided on the exact timing.
Therefore, the ongoing concerns over Trump's proposed tariffs and ongoing market uncertainty, combined with the Fed's cautious stance on rate cuts, are driving investors toward gold as a safe-haven asset, supporting its price.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is consolidating around $2,900, struggling to gain momentum as it trades near its key pivot point at $2,919.39.
The metal’s short-term price action remains uncertain, with traders eyeing crucial resistance and support levels. A break above $2,935.54 could trigger fresh buying interest, potentially pushing prices toward the next resistance levels at $2,954.97 and $2,970.84.
On the downside, immediate support is seen at $2,853.43. If gold breaches this level, further declines toward $2,834.27 and $2,811.56 may follow. The 50-day EMA at $2,906.38 is acting as dynamic support, keeping gold within a tight range.
The 4-hour chart suggests gold remains in a consolidation phase, with buyers defending the $2,887 level while sellers cap gains near $2,920. The market's next major move hinges on whether gold can break out of this tight range. A buy entry above $2,887 with a target of $2,920 and a stop loss at $2,872 could provide a strategic trade setup.
Gold’s technical outlook remains bullish above $2,887, but failure to hold support could accelerate selling pressure.
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