• Gold price remains supported by ongoing concerns over Trump’s tariff policies.
• Renewed USD weakness and inflation worries further bolster XAU/USD.
• Hawkish Fed outlook limits additional gains for the non-yielding metal.
Gold prices (XAU/USD) continue to trade within a multi-day range near last week’s all-time high, struggling to gain significant traction during the Asian session on Monday. Market uncertainty surrounding US President Donald Trump’s trade tariffs and their economic impact, combined with a broader risk-averse sentiment, supports the safe-haven appeal of gold. Additionally, ongoing geopolitical tensions and persistent weakness in the US Dollar (USD) provide further support for the precious metal.
However, expectations that the Federal Reserve (Fed) will maintain higher interest rates for an extended period due to persistent inflation limit gold’s upside. Traders remain cautious ahead of Friday’s release of the US Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, which could offer key insights into future rate decisions. This data will likely influence USD demand and determine gold’s near-term trajectory.
Gold Traders Remain Cautious; Bullish Bias Holds Amid Trade War Concerns
• Fears of economic fallout from Trump’s tariff policies helped gold register an eighth consecutive weekly gain, reaching a fresh record high last week.
• Since taking office, Trump has imposed a 25% tariff on steel and aluminum and an additional 10% tariff on Chinese imports. Last week, he signaled plans for further tariffs within the next month.
• US economic data released on Friday fueled concerns about growth, weakening the USD to its lowest level since December 10 and supporting gold’s appeal.
• The flash S&P Global US Composite PMI dropped to 50.4 in February, down from 52.7 in January, signaling slower private-sector business activity amid tariff concerns.
• The University of Michigan’s US Consumer Sentiment Index fell to 64.7 in February, a 15-month low, compared to January’s reading of 71.7.
• Inflation expectations for the next year surged to 4.3%, the highest since November 2023, reinforcing gold’s role as a hedge against rising prices.
• Stronger consumer inflation data and hawkish Federal Open Market Committee (FOMC) minutes indicate the Fed may keep rates steady longer, posing a challenge for the non-yielding metal.
• Friday’s PCE Price Index release will be critical in shaping Fed rate expectations and influencing XAU/USD price action.
• Other key US economic data this week include Thursday’s preliminary Q4 GDP report and Durable Goods Orders, alongside speeches from influential FOMC members, which will impact USD movement.
Technical Outlook: Gold Needs Further Consolidation Amid Overbought RSI
From a technical standpoint, the daily Relative Strength Index (RSI) remains above 70, indicating overbought conditions. This could discourage aggressive bullish positions, supporting a continuation of gold’s range-bound movement.
However, sustained buying above the $2,950–2,955 zone, or a new all-time high, could serve as a fresh bullish catalyst, allowing gold to extend its well-established uptrend from the past two months.
On the downside, any pullback may attract buyers around the $2,920–2,915 support zone, followed by the psychological $2,900 level. A decisive break below $2,880 could accelerate the decline toward $2,860–2,855, with further downside potential toward the $2,834 and $2,800 levels.
