Daily Price Outlook
During the early European session on Wednesday, the price of gold (XAU/USD) extended its winning streak and remained well bid around above 2,920 level.
However, the bullish rally was supported by increased safe-haven demand. The rise in gold prices comes amid growing geopolitical tensions and economic uncertainties, particularly due to the US tariffs on imports from Mexico, Canada, and China.
Although, the gains were slightly capped by rising US Treasury yields, which put pressure on non-yielding assets like gold.
Rising Trade Tensions and Geopolitical Uncertainty Boost Gold’s Safe-Haven Appeal
It should be noted that the recent implementation of a 25% tariff by former US President Donald Trump on Mexican and Canadian imports, along with an increase in Chinese duties to 20%, has heightened trade tensions. This has led investors to seek safe-haven assets such as gold.
Moreover, the US's decision to pause military aid to Ukraine further fueled market uncertainty, boosting demand for the precious metal. The latest reports indicate that all US military equipment not yet delivered to Ukraine has been grounded, raising concerns about geopolitical stability.
Apart from this, Canada has confirmed retaliatory tariffs on US imports, while China’s Commerce Ministry announced additional tariffs of up to 15% on key US farm products. These developments increase the risk of a global trade war, dampening investor sentiment and reinforcing gold’s appeal as a safe-haven asset.
Gold's Bullish Momentum Limited by Rising US Treasury Yields and Strong Dollar
Despite gold’s bullish momentum, the rising US Treasury yields have limited its upside trend. At the time of writing, the US 2-year bond yield stands at 3.98%, while the 10-year yield is at 4.25%.
On the data front, the recent ISM Manufacturing PMI data showed a decline to 50.3 from 50.9 in the previous month, while the Prices Paid Index surged to a nearly three-year high due to concerns over import duties.
Meanwhile, the US Dollar Index (DXY) remains strong, trading around 105.70, which could also limit the gold’s bullish movement.
Moving ahead, investors are now shifting their focus to key US economic data releases scheduled for the North American session, particularly the ISM Services PMI and the ADP Employment Change report.
Hence, the weaker-than-expected PMI could reinforce concerns about slowing economic growth, supporting gold prices further.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is currently trading at $2,915.74, struggling to maintain bullish momentum as it hovers near key support levels. The pivot point at $2,907.49 remains a critical threshold for determining the metal’s short-term trajectory.
The 50-day EMA at $2,906.78 suggests a near-term consolidation phase, with traders watching closely for a breakout or breakdown.
On the upside, a decisive push above $2,907 could strengthen bullish sentiment, paving the way for a move toward $2,956.85, the first major resistance level. If momentum persists, gold may extend its rally toward $2,978.40, with a further upside target at $2,996.71.
Conversely, failure to hold above $2,907 could expose the market to downside risks. Immediate support sits at $2,883.16, and a sustained drop below this level may accelerate selling pressure toward $2,859.91, with deeper losses potentially testing the $2,832.63 level.
Related News
- EUR/USD Price Analysis – March 05, 2025
JOIN LHFX TODAY
24/7 live support, lightning fast withdrawals, guaranteed safe and reliable trading platforms with a true ECN broker.