Daily Price Outlook
Gold (XAU/USD) fell slightly during the European session on Friday after hitting a record high the day before.
However, the decline was mainly due to the bullish US dollar, which gaining strength for the third straight session, staying near its weekly high.
Moreover, some traders took profits before the weekend, leading to a pullback after gold’s strong rally.
However, the downside seems limited, as investors remain cautious about the Federal Reserve’s (Fed) future monetary policy direction. Market participants widely anticipate that the Fed will begin cutting interest rates this year, capping further gains for the dollar and offering support to gold price.
Geopolitical Tensions Boost Gold’s Safe-Haven Demand
On the geopolitical front, the ongoing conflicts continue to strengthen gold’s safe-haven appeal as tensions remain high in the Middle East.
Meanwhile, the Russia-Ukraine war is also not showing any sign of slowing down. Notably, Ukraine recently launched a drone attack on Russia’s Engels airbase, prompting Moscow to respond with 171 drone strikes.
These developments have increased investor concerns about economic instability. Meanwhile, Russian and US officials are scheduled to meet in Saudi Arabia to discuss the Ukraine conflict, adding more uncertainty to the global situation.
On the other side, tensions in the Middle East escalated as Israel resumed airstrikes on Gaza, breaking a previously held ceasefire with Hamas.
The retaliatory rocket attacks from Hamas, though not causing casualties, have further fueled market uncertainty. These ongoing risks continue to bolster gold’s position as a safe-haven asset.
Fed Rate Cut Expectations and Geopolitical Risks Support Gold
Despite the bullish bias in US dollar, the ongoing expectations of Federal Reserve rate cuts later this year continue to weigh on the currency.
The Fed recently indicated its intention to implement two 25 basis-point rate cuts before the end of 2024, citing concerns over slowing economic growth.
Fed Chair Jerome Powell also acknowledged that trade tariffs imposed by US President Donald Trump could further dampen economic expansion, reinforcing the case for monetary policy easing.
Market expectations currently price in potential rate cuts in June, July, and October, creating hurdles for the US dollar. This, in turn, acts as a supportive factor for gold, which thrives in a lower interest rate environment.
Looking ahead, traders will closely watch any updates on US trade policies, central bank decisions, and geopolitical risks for further direction. For now, gold remains well-positioned, with limited downside amid prevailing uncertainties in global markets.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $3,033.97, showing marginal gains of 0.03% as it consolidates above the key 50-day EMA at $3,027.11.
The market is balancing between a bullish continuation and a potential retracement, with $3,051.45 acting as the pivot point for today’s session.
Despite a recent pullback, gold remains in an upward trend, finding strong support near $3,006.31.
If prices hold above this level, the next bullish targets are $3,057.40, followed by $3,068.71 and $3,078.95, where profit-taking could emerge.
A sustained move above $3,051.45 would confirm bullish momentum, paving the way for further gains.
Conversely, failure to hold above $3,027 may lead to a test of the $3,006.31 support level, with extended downside risk toward $2,993.42 and $2,979.20.
The 50-day EMA remains a key short-term indicator, keeping the bias slightly bullish unless breached.
However, traders should watch for profit-taking near $3,050, especially if the dollar strengthens. A break below $3,006 would shift sentiment bearish, signaling deeper correction levels.
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