Daily Price Outlook
Gold (XAU/USD) retreated from its all-time high of $2,954 reached on Thursday, dropping over 1% to trade around $2,925 at the time of writing on Friday.
Despite this pullback, the precious metal remains well above the $2,930 level, supported by a mix of economic data and geopolitical developments.
Gold came under pressure as economic data from the Eurozone indicated a slowdown in business activity. Reports from S&P Global and Hamburg Commercial Bank (HCOB) showed that the services sector contracted further in February.
France's preliminary Services PMI dropped to 44.5, falling short of the 48.9 estimate. Similar declines were observed in Germany and across the Eurozone, fueling concerns about economic weakness in the region.
Looking ahead, market attention shifts to the US preliminary S&P Global PMI for February, with the services sector expected to tick up slightly to 53.0 from 52.9 in January. Hence, the stronger-than-expected data could further impact gold prices by boosting the US Dollar.
Strong US Dollar and Fed’s Cautious Stance Keep Gold Under Pressure
On the US front, the broad-based US dollar remains strong near 106.50, keeping gold under pressure. The greenback gained support as US jobless claims rose to 219,000, exceeding expectations.
Meanwhile, Federal Reserve officials stayed cautious on inflation, with Governor Adriana Kugler stating that price stability still has "some way to go."
On the other hand, St. Louis Fed President Alberto Musalem warned about stagflation risks, while Atlanta Fed President Raphael Bostic said rate cuts are possible this year, depending on economic data.
The latest FOMC meeting minutes showed the Fed remains cautious, stressing the need for clear signs of lower inflation before cutting rates.
Therefore, the firm US Dollar and cautious Fed stance on inflation limit gold’s upside, as higher jobless claims and stagflation concerns add uncertainty, reducing gold’s appeal amid expectations of delayed rate cuts.
Geopolitical Tensions and Uncertainty Provide Support for Gold
On the geopolitical front, the ongoing trade tension in the global market also played a role in the gold’s movement. The Trump administration signaled possible sanctions relief for Russia in ongoing negotiations over the Ukraine conflict.
Besides, trade tensions resurfaced as President Trump confirmed a 25% tariff on pharmaceutical and semiconductor imports starting in April, alongside existing auto tariffs. These developments have fueled uncertainty in global markets, providing underlying support for gold.
Despite the recent pullback, gold continues to find support from geopolitical risks and ongoing uncertainty surrounding the Federal Reserve’s policy path.
Traders will closely monitor upcoming economic data and central bank commentary for further direction. If US economic indicators show strength, gold may face additional pressure, but lingering inflation concerns and geopolitical uncertainties are likely to keep the metal well-supported above the $2,930 level.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,928.20, up 0.06% for the session, reflecting a cautiously bullish sentiment. The price is holding above the crucial pivot point at $2,916.73, which serves as a key support level, reinforcing the bullish bias.
As long as gold stays above this pivot, the upward trendline remains intact, suggesting further gains are likely.
The first resistance to watch is at $2,955.49, followed by $2,978.00 and the psychological level of $3,001.64. Breaking above these levels could open the door to new highs, driven by continued bullish momentum.
Conversely, if gold falls below the pivot point at $2,916.73, it may face selling pressure, with the first support at $2,892.98. A further decline could target $2,865.06 and $2,833.80, marking significant retracement levels.
The 50-Day Exponential Moving Average (EMA) at $2,916.18 is acting as dynamic support, reinforcing the bullish sentiment.
From a technical perspective, maintaining positions above the pivot point favors buyers, while a break below this level could shift the sentiment to bearish.
The recommended entry point is to buy above $2,917, with a take profit at $2,955 and a stop loss at $2,896 to manage risk effectively.
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