Gold prices remain subdued below $2,900 as traders await the US CPI report

Gold prices remain under pressure through the first half of the European session on Wednesday, lacking strong follow-through selling as traders await the US Consumer Price Index (CPI) report. Meanwhile, the US Dollar (USD) gains traction following hawkish comments from Federal Reserve Chair Jerome Powell, coupled with a positive risk sentiment, weighing on the yellow metal for the second consecutive day.

However, trade war concerns stemming from US President Donald Trump’s new tariffs on commodity imports and potential reciprocal levies continue to provide support for gold. These factors suggest caution before confirming a near-term top and committing to a meaningful corrective decline from the $2,942-2,943 all-time high reached on Tuesday amid trade war fears.

Market Drivers: Gold Bears Remain Cautious Amid Trump’s Tariff Policies

• Fed Chair Powell’s Senate Testimony: Powell reaffirmed confidence in the US economy, highlighting a strong labor market and gradual inflation easing, though it remains above the 2% target.
• Inflation & Fed’s Policy Outlook: Recent upbeat US employment data and expectations that Trump’s policies may trigger inflationary pressures reinforce market bets on a prolonged hawkish Fed stance.
• US Dollar Strength: The greenback finds support as investors raise bets on steady interest rates, pressuring gold for the second straight session.
• Trump’s Trade Tariffs: The 25% steel and aluminum tariffs imposed by the US, along with proposed additional levies on autos, pharmaceuticals, and chips, spark concerns of a global trade war, boosting demand for safe-haven assets like gold.
• Upcoming US CPI Data: Investors await January’s inflation figures, with headline CPI expected at 2.9% YoY and core CPI at 3.1% YoY, slightly below December’s 3.2% reading. These numbers will influence the Fed’s rate-cut path and impact gold’s near-term direction.

Technical Outlook: Dip-Buying Opportunities Ahead?

From a technical perspective, the Relative Strength Index (RSI) on the daily chart indicates some profit-taking, limiting further gold price declines.

• Key Support Levels:

  • $2,855-2,852 zone – Initial demand area
  • $2,834 support – Deeper retracement level
  • $2,800 mark – Critical downside threshold

• Key Resistance Levels:

  • $2,910 – Immediate hurdle for bulls
  • $2,942-2,943 – Record high reached on Tuesday
  • Breakout above $2,943 – Could fuel a continued uptrend

A sustained move above $2,910 may encourage fresh buying, potentially propelling gold back towards its all-time peak. Conversely, a break below $2,834 may trigger deeper losses. With geopolitical risks and trade tensions in play, gold remains poised for volatility in the sessions ahead.