Daily Price Outlook
During the European trading session, Gold (XAU/USD) extended its bullish trend and held steady above the $2,900 level. However, the precious metal's rally remained intact as the weakening US Dollar and rising expectations of Federal Reserve rate cuts provided strong support.
Fed’s Dovish Stance and Rate Cut Expectations Weigh on USD, Boosting Gold’s Appeal
On the US front, the broad-based US Dollar lost momentum following dovish comments from Federal Reserve (Fed) official Christopher Waller. He stated that while a March rate cut is unlikely, the Fed is open to reducing rates two or three times this year.
He mentioned that a rate cut in March is unlikely but said the Fed could lower rates two or three times this year. Markets agree with this outlook, expecting the first cut around June. This softer stance put pressure on the USD, helping Gold hold onto its gains.
The Fed remains cautious about the timing of rate cuts, with officials monitoring inflation trends before making policy adjustments. Fed official Christopher Waller said that a strong job market and slowing inflation could support rate cuts in the coming months.
This has boosted demand for Gold since lower interest rates make it more attractive by reducing the cost of holding non-yielding assets like Bullion.
Geopolitical Tensions and Trade Concerns Lift Gold Demand
On the geopolitical front, the tensions between the US and China escalated after Chinese Foreign Minister Wang Yi defended China’s handling of fentanyl exports and accused the US of using the issue to exert pressure. Hence, the rising geopolitical uncertainty bolstered Gold's appeal as a hedge against economic instability.
Moreover, Australia recorded its highest-ever Gold exports to the US in January, totaling A$4.6 billion ($2.9 billion), as traders rushed to deliver metal to New York warehouses amid concerns over potential tariffs.
Therefore, the rising US-China tensions and record Australian Gold exports to the US increased demand for Gold as a safe-haven asset, supporting its price by fueling investor concerns over economic instability and potential trade restrictions.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,912.07, maintaining a narrow range as investors assess key economic data. The metal remains above its pivot point at $2,905.47, signaling a potential bullish bias.
However, upside momentum faces resistance at $2,929.94, with additional hurdles at $2,942.57 and $2,954.43. A breakout above these levels could open the door for further gains, particularly if economic uncertainty persists.
On the downside, immediate support sits at $2,884.75, with deeper levels at $2,872.63 and $2,858.99. A breach below $2,905.47 could accelerate selling pressure, shifting sentiment toward a more bearish outlook.
The 50-day EMA at $2,904.74 is providing dynamic support, reinforcing the case for buyers in the market. Gold’s ability to hold above this level is crucial for maintaining its upward momentum.
A strong Nonfarm Payrolls (NFP) report on Friday could pressure gold lower, strengthening the U.S. dollar and diminishing gold’s appeal. Conversely, a weaker-than-expected jobs report would likely boost expectations of Federal Reserve rate cuts, supporting gold prices.
Traders should watch for a sustained move above $2,929.94 to confirm further upside potential, while failure to hold above $2,905.47 may lead to a test of lower support levels.
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