- Gold remains steady after the EU and China pledged to retaliate against US tariffs earlier on Wednesday.
- Russia is set to review a US-brokered ceasefire proposal for Ukraine in the coming days.
- Traders anticipate the release of US inflation data on Wednesday.
Gold prices (XAU/USD) remain flat at $2,915 as of Wednesday, with traders awaiting the release of the US Consumer Price Index (CPI) for February. Market consensus points to a slowdown in inflation across both monthly and yearly measures. However, analysts warn that the US tariff strategy could have an inflationary effect, potentially influencing future CPI readings.
Investor sentiment remains cautious after Chinese Foreign Minister Wang Yi stated that if the US continues to impose tariffs on steel and aluminum, China would respond accordingly. Meanwhile, the European Union has vowed to implement countermeasures by April 13.
On the geopolitical front, a US-brokered ceasefire proposal for Ukraine has been presented to Russia, awaiting its response in the coming days.
Market Movers: Fed Rate Cut Bets in Focus
- Chinese consumption stocks are on the rise following the nation’s annual political gathering, which emphasized boosting domestic demand. Hong Kong-based jewelers lead the gains, benefiting from increased demand for gold proxies, according to Bloomberg.
- Wall Street remains on edge as investors react to erratic tariff policies, persistent inflation, and uncertainty over the Federal Reserve’s (Fed) rate cut timeline. Banks such as JPMorgan Chase & Co. and RBC Capital Markets have adjusted their bullish 2025 forecasts due to concerns over the economic impact of Trump’s tariff policies.
- The CME FedWatch Tool indicates a 97% probability of no interest rate change at the upcoming Fed meeting on March 19, while the likelihood of a rate cut at the May 7 meeting stands at 39.5%.
Technical Analysis: CPI Data Could Set Off a Chain Reaction in US Yields
Gold’s movements this week have been resilient, with Monday’s dip quickly bought up as prices now approach key resistance levels. The next test lies at the monthly high of $2,930, and a breakout above this level could pave the way for a fresh all-time high.
From a technical standpoint, Gold has reclaimed the $2,900 threshold and is currently trading above the daily Pivot Point at $2,906. It is advancing toward the R1 resistance at $2,931, aligning with last week’s peak. A breakout here would shift focus to the R2 resistance at $2,947, followed by the all-time high of $2,956.
On the downside, the key support levels to watch include:
- Pivot Point at $2,906
- S1 support at $2,890
- S2 support at $2,864, aligning with the February 12 low, which should act as a strong floor against further declines.
With the CPI release on the horizon, traders remain on alert for potential volatility in gold and broader financial markets.
