Daily Price Outlook
Gold (XAU/USD) remains in sideways consolidation after hitting a fresh all-time high of around $3,001 on Friday.
Despite some pullback, the precious metal remains on track for strong weekly gains as investors assess the impact of escalating US trade policies and increasing expectations of Federal Reserve rate cuts.
The ongoing uncertainty supports gold's status as a safe-haven asset, keeping its bullish outlook intact.
US Trade Tensions and Fed Rate Cut Bets Support Gold
On the geopolitical front, the escalating tariff war initiated by Trump continues to fuel market uncertainty, increasing demand for safe-haven assets like gold.
The latest move includes a proposed 200% duty on European wine and cognac imports unless the European Union removes surcharges on US whiskey.
This follows the recent 25% tariff on steel and aluminum imports, raising fears of further escalation. These aggressive trade policies have heightened recession concerns, leading investors to increase their bets on Fed rate cuts.
Market participants now expect the Federal Reserve to implement three 25 basis point rate cuts in June, July, and October to mitigate a potential economic downturn.
This outlook has been reinforced by softer US inflation data, with the headline Consumer Price Index (CPI) slowing to 2.8% YoY in February, down from 3% previously.
Gold's Gains Capped by US Dollar Recovery Despite Bullish Factors
Despite strong support from trade tensions and Fed rate cut expectations, gold’s gains remain limited by a recovering US Dollar.
The US Dollar Index (DXY) extended its rebound for the third straight day, recovering from its lowest level since mid-October.
However, the recent stability in global equity markets, spurred by positive US-Canada trade negotiations and reduced fears of a US government shutdown, has also tempered gold's bullish momentum. Although, the overall market sentiment still favors gold’s upside potential.
Market participants now turn their attention to the upcoming Michigan US Consumer Sentiment and Inflation Expectations Index for further direction.
Meanwhile, the Federal Reserve's two-day monetary policy meeting next week will be crucial in shaping the near-term outlook for gold.
Hence, the dovish signals from the Fed could further support gold’s bullish trend, while stronger-than-expected economic data could weigh on prices.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,985.31, slipping 0.01% as it hovers below the key pivot level of $2,993.84. The metal remains in a tight range as traders weigh Federal Reserve rate cut expectations against a strengthening U.S. dollar.
Gold’s inability to sustain momentum above $2,993 highlights investor caution, with resistance levels at $3,005.25 and $3,015.30 posing near-term hurdles.
On the downside, immediate support is seen at $2,979.51, with further selling pressure potentially driving gold toward $2,963.65 and $2,956.39.
The 50-day Exponential Moving Average (EMA) at $2,928.44 continues to provide dynamic support, reinforcing the longer-term uptrend. However, failure to hold above this level could expose gold to further declines.
Despite short-term weakness, gold’s broader trend remains bullish, driven by growing expectations of Federal Reserve policy easing.
Softer U.S. inflation data has fueled speculation of three rate cuts in 2024, with traders eyeing the upcoming FOMC meeting for further guidance. A dovish stance from policymakers could propel gold beyond the $3,000 psychological mark.
For now, a daily close above $2,993.84 is required to confirm bullish momentum, while a break below $2,979.51 may signal deeper consolidation.
Traders should watch for a decisive move in either direction to determine the next leg of gold’s price action.
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