Daily Price Outlook
Gold price (XAU/USD) extended its upward rally and hit the intra-day high of $2,944. However, the reason for its upward trend could be linked to uncertainty around US trade tariffs under Donald Trump’s policies, which is making investors cautious about the global economy.
This, combined with a risk-off sentiment in the market, has pushed traders toward safe-haven assets like gold. Apart from this, ongoing geopolitical tensions and a weaker US dollar are further supporting the price of gold.
Despite these bullish factors, gold’s gains remain limited due to expectations that the Federal Reserve (Fed) will keep interest rates high for longer. As a result, traders are holding back from making aggressive moves and are waiting for key US inflation data later this week.
Looking forward, the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index on Friday will be crucial. This report is the Fed’s preferred inflation measure and will provide clearer signals about future interest rate decisions.
If inflation remains high, the Fed may delay rate cuts, which could slow down gold’s rally. On the other hand, weaker inflation data could weaken the US dollar and push gold prices higher in the near term.
Weak US Dollar and Fed Uncertainty Boost Gold’s Safe-Haven Appeal
On the US front, the broad-based US dollar is struggling, with the US Dollar Index (DXY) falling below 106.50. This weakness comes after disappointing US economic data, including higher-than-expected jobless claims and a drop in business activity.
The US Composite PMI slipped to 50.4 in February from 52.7 in January, while the Services PMI fell below expectations, signaling slowing economic momentum.
Meanwhile, jobless claims rose to 219,000, showing signs of a weaker labor market. These factors have put pressure on the USD, making gold more attractive as an alternative investment.
At the same time, the Federal Reserve remains cautious about cutting interest rates. Fed Governor Adriana Kugler stated that inflation is still not close to the 2% target, and St. Louis Fed President Alberto Musalem warned of stagflation risks.
However, Atlanta Fed President Raphael Bostic left the door open for two possible rate cuts this year, depending on economic data. The uncertainty surrounding future rate decisions keeps gold traders on edge, as lower rates would boost gold prices by making the non-yielding metal more appealing.
Apart from this, former President Trump hinted at a new trade deal with China but also mentioned possible 25% tariffs on pharmaceuticals and semiconductors starting in April. These trade tensions and global economic concerns continue to support gold as a safe-haven asset.
Traders are now looking ahead to the US Personal Consumption Expenditures (PCE) Price Index on Friday, which will provide further clues on inflation and the Fed’s next moves, ultimately shaping gold’s direction in the coming days.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,943.72, maintaining a cautiously bullish stance above the pivot point at $2,925.94. This level serves as a critical support zone, reinforcing the upward trend.
If gold manages to break above the immediate resistance at $2,955.49, it could target the next resistance at $2,978.00, with a potential extension to $3,001.64. The bullish sentiment is supported by the price holding above the 50 EMA at $2,920.06, indicating continued buying interest.
Conversely, a break below the pivot point could expose immediate support at $2,904.96, followed by deeper support at $2,878.08 and $2,849.43. The overall technical outlook remains bullish as long as prices stay above $2,925.94 and the 50 EMA.
Traders should watch for a decisive breakout above $2,955.49 to confirm the bullish continuation, while a drop below $2,925.94 may signal a bearish pullback.
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