Daily Price Outlook
Gold price (XAU/USD) extended its downward trend, struggling to gain momentum and hovering around the $2,935 level after hitting an intra-day low of $2,929. The decline is driven by a strengthening US Dollar (USD), which rebounded from its lowest level since December 10.
Although, gold continues to attract demand as a safe-haven asset amid ongoing economic uncertainty, particularly concerns over former President Trump's tariff plans. Furthermore, expectations of further interest rate cuts by the Federal Reserve this year help limit deeper losses in gold prices.
Stronger US Dollar and Mixed Economic Data Weigh on Gold Prices
On the US front, the broad-based US Dollar gained traction as the US Dollar Index (DXY) rebounded near 106.57. However, the greenback strengthened after Federal Reserve Bank of Chicago President Austan Goolsbee stated that the central bank needs more clarity before considering interest rate cuts.
Meanwhile, former President Trump signed a memorandum instructing US authorities to restrict Chinese investments in key sectors, aiming to protect national security while still encouraging foreign investment. These developments boosted the USD, putting pressure on gold prices.
On the data front, the US Composite PMI dropped to 50.4 in February from 52.7, signaling slower economic activity. In the meantime, the Services PMI fell to 49.7, missing expectations, while Manufacturing PMI improved slightly to 51.6.
Moreover, US Initial Jobless Claims rose to 219,000, exceeding forecasts, but Continuing Jobless Claims remained close to expectations. The weaker services sector and rising jobless claims fuel speculation of future Fed rate cuts, which helps limit gold’s losses.
US Sanctions on Iran and Ukraine Peace Hopes Impact Gold Prices
On the geopolitical front, the US imposed new sanctions on over 30 brokers, tanker operators, and shipping companies involved in selling and transporting Iranian oil.
This marks the second round of sanctions as the US aims to cut Iran’s crude exports to zero, preventing the country from developing nuclear weapons. The stricter sanctions add to global economic uncertainty, which often boosts demand for safe-haven assets like gold.
At the same time, investors are closely watching developments in the Ukraine conflict as hopes for a peace deal are rising after French President Emmanuel Macron stated that a truce between Ukraine and Russia could be possible in the coming weeks.
He discussed this with former President Trump at the White House on the third anniversary of Russia’s invasion. If peace talks progress, sanctions on Russia may ease, potentially increasing its oil exports.
GOLD (XAU/USD) – Technical Analysis
Gold prices are showing cautious sentiment, trading at $2,939.55, down 0.02% for the session. The precious metal is currently hovering just above the pivotal level of $2,934.63, a critical threshold that could determine its next move.
Holding above this pivot keeps bullish hopes alive, with immediate resistance at $2,955.49. A break above this level could push prices towards $2,970.91, with the next target at $2,985.30 if bullish momentum sustains.
On the downside, immediate support is at $2,921.42, followed by a more substantial floor at $2,907.22. If bearish pressure intensifies, the next key support level lies at $2,892.63. The 50 EMA sits at $2,938.23, acting as a dynamic support, indicating short-term indecision amidst a broader bullish trend.
The technical outlook suggests a cautious buy above the pivot of $2,934. An entry at this level with a target of $2,955 and a stop loss at $2,925 offers a favorable risk-reward ratio. Traders should watch for volume confirmation and any potential breakout above the resistance to gauge momentum strength.
However, a break below the pivot would shift the sentiment to bearish, likely triggering a move towards the immediate support at $2,921.42.
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