Daily Price Outlook
Gold (XAU/USD) extended its upward trend and remained well bid around $2,850 on Monday, after finding support near a three-week low of $2,832 from Friday.
However, the precious metal gained momentum as traders continued to expect that the Federal Reserve may cut interest rates by 0.25% twice before the year ends.
This outlook was strengthened by signs of weakening consumer sentiment, which failed to push the US Dollar higher, even though it had briefly recovered from its two-month low.
Gold Supported by Weaker USD and Rate Cut Expectations
On the US front, the broad-based US dollar has been losing traction, thanks to the market expectations that the Federal Reserve might cut interest rates in the near future.
However, the weakening of the dollar was also influenced by the latest economic data, including the Personal Consumption Expenditures (PCE) inflation report, which showed that inflation remains under control.
Meanwhile, the monthly PCE came in steady at 0.3%, and the annual PCE was at 2.6%. Although inflation eased slightly in the core PCE category, the overall economic conditions provided a supportive backdrop for gold.
Moreover, the continued expectations of a possible rate cut by the Federal Reserve further pressured the US dollar, as lower rates make the dollar less attractive compared to other assets.
As a result, gold gained momentum, with investors seeking protection from potential economic instability, helping to maintain a positive bias for the precious metal.
Geopolitical Uncertainty and Trade Tensions Boost Gold Demand as a Safe Haven
Another factor supporting gold prices is the uncertainty surrounding US President Donald Trump's tariff plans. However, the ongoing trade tensions, particularly with China, have fueled concerns about potential economic fallout.
Meanwhile, the Trump's recent decision to limit Chinese investments in US strategic sectors and impose tariffs on key goods has intensified fears of a trade war. This, combined with rising geopolitical risks, has increased demand for gold as a safe-haven asset.
Apart from this, the escalating tensions between Trump and Ukrainian President Volodymyr Zelenskyy added to the geopolitical uncertainty.
Notably, the planned agreement between the two leaders, which would have granted the US greater access to Ukraine's rare earth minerals, was abandoned following a heated exchange, further complicating the global political situation.
Global Economic Improvement Caps Gold Gains as Traders Await Key US Data
Despite increasing geopolitical uncertainty, the global market sentiment has been flashing green on the day as the global economy shows signs of improvement.
This can be witnessed by the fact that Manufacturing activity in both Australia and China showed positive growth, with Australia’s PMI revised upward and China’s PMI coming in stronger than expected.
This improvement in global economic conditions has capped further gains for gold, as traders stay cautious ahead of this week’s important US economic data releases.
Looking ahead, the focus will shift to key US economic reports, such as the ISM Manufacturing PMI and the highly anticipated Nonfarm Payrolls report.
These releases could provide fresh insights into the US economy and influence the direction of the US Dollar, which will, in turn, affect gold prices.
GOLD (XAU/USD) – Technical Analysis
Gold prices (XAU/USD) are hovering near $2,863.95, struggling to gain momentum as key resistance levels limit upside potential. The pivot point at $2,867.09 remains a crucial level—staying below this threshold reinforces a bearish short-term bias.
Technically, gold is facing immediate resistance at $2,888.58, with stronger hurdles at $2,906.26 and $2,930.44. A breakout above these levels could shift momentum bullish, but failure to clear $2,867.09 leaves gold vulnerable to further declines.
On the downside, immediate support lies at $2,845.19, followed by $2,829.07 and $2,810.89, areas that could attract buying interest if tested.
The 50-day EMA at $2,894.43 is acting as a dynamic resistance, suggesting continued selling pressure below this mark.
Short-term traders should monitor price action closely—a sell entry below $2,866 with a take-profit target of $2,845 appears viable, with a stop-loss at $2,879 to manage risk.
Given the ongoing macroeconomic uncertainty and Federal Reserve rate expectations, gold remains in a consolidation phase. A decisive move above resistance or below key support levels will likely determine its next direction.
Related News
- GBP/USD Price Analysis – March 03, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.