Daily Price Outlook
During the European trading session, the price of gold (XAU/USD) continued to rise, reaching an intra-day high of $2,903. This upward movement came after a period of uncertainty in the markets.
However, the uncertainty was mainly driven by concerns over the potential effects of former US President Donald Trump’s trade policies. As a result, many investors decided to move their money into safer assets like gold to protect their wealth.
US Dollar Weakness and Fed Rate Cut Speculation Support Gold Prices
Moreover, the ongoing weakness in the US dollar further supported gold prices. However, the greenback faced selling pressure due to growing speculation that a tariff-induced economic slowdown might push the Federal Reserve (Fed) to implement multiple rate cuts this year. Hence, the lower interest rates typically benefit non-yielding assets like gold, boosting its appeal.
Geopolitical Risks and Trade Tensions Drive Gold Prices Higher
On the geopolitical front, the former President Trump’s 25% tariffs on global steel and aluminum imports are scheduled to take effect on Wednesday, with even more tariffs expected to be imposed on April 2.
These protectionist measures raised concerns about a possible US recession, which boosted demand for gold as a safe-haven asset.
Moreover, the signs that the US labor market is weakening raised expectations that the Federal Reserve might start cutting interest rates again in June.
This could keep US Treasury yields low and put pressure on the US dollar, which would likely increase demand for gold.
Apart from this, market attention shifted to rising geopolitical tensions, especially between Ukraine and Russia. However, the meeting between Ukrainian President Volodymyr Zelenskiy and former President Trump ended in diplomatic conflict, leading to the US suspending all military aid to Ukraine.
At the same time, Ukraine carried out a large-scale drone attack on Moscow, with Russian air defenses shooting down 11 drones that were targeting key locations near the Kremlin.
These escalating tensions and the growing uncertainty in the region added more pressure on gold prices, pushing them higher as investors sought safety.
China's Economic Weakness and US Data Watch Fuel Gold Price Support
Moreover, China’s latest economic data added to market jitters. The Chinese Consumer Price Index (CPI) declined by 0.7% year-over-year in February, exceeding expectations and marking the first consumer deflation since January 2024.
The decline was partly due to weak demand after the Spring Festival, which raised worries about China’s economic outlook and boosted demand for safe-haven assets.
Therefore, the decline in China’s CPI raised concerns about the economy, increasing demand for safe-haven assets like gold. This led to higher gold prices as investors sought protection from economic uncertainties.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,895.25, hovering just below the $2,900 pivot point, signaling indecision in the market. Despite a minor decline, gold remains within a narrow range as traders await key catalysts.
The 50-day EMA at $2,909.07 acts as immediate resistance, aligning closely with short-term price action. A sustained break above this level could push gold toward $2,915.39, with further upside targets at $2,930.55 and $2,954.43.
On the downside, immediate support lies at $2,880.20, and a breach of this level could accelerate selling pressure, exposing gold to $2,858.99 and potentially $2,838.41. The broader trend remains bearish below $2,900, with a firm rejection of resistance reinforcing downside risk.
For traders, the technical setup favors selling below $2,899, targeting $2,880, with a stop loss at $2,913. Short-term sentiment hinges on macroeconomic developments, particularly inflation data and Federal Reserve rate expectations, which could dictate the next move.
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