Gold prices saw a modest recovery after hitting a one-week low in the previous session. The precious metal, traditionally viewed as a safe-haven asset, benefited from ongoing uncertainty surrounding US President Donald Trump’s tariff policies.
Despite this, analysts suggest that Trump’s plans to increase tariffs could raise inflation concerns within the US Federal Reserve (Fed). This may prompt the central bank to keep interest rates elevated for a longer period, potentially limiting gold’s price gains. Higher interest rates reduce the appeal of non-yielding gold, which could cap any upside for the metal.
Attention will turn to key economic data releases later this week. On Wednesday, the US will report New Home Sales for January, while Fed officials Raphael Bostic and Thomas Barkin are scheduled to speak. On Friday, the focus will shift to the US Personal Consumption Expenditures (PCE) Price Index for January.
Gold Price Holds Gains as Trade War Tensions Persist
Late Tuesday, President Trump signed an Executive Order directing the US Commerce Department to initiate an official probe into copper markets. Additionally, Trump confirmed that tariffs on Canadian and Mexican imports would proceed as planned, despite efforts by both countries to strengthen border security and curb the flow of fentanyl into the US ahead of a March 4 deadline, according to Reuters.
Meanwhile, US consumer confidence saw a sharp decline, falling to its lowest level since August 2021. The Conference Board reported a drop to 98.3 in February, down from 105.3 previously.
Fed officials are also making headlines. Richmond Fed President Thomas Barkin announced a wait-and-see approach regarding interest rates, pending clearer signs that inflation is returning to the Fed’s 2% target. Dallas Fed President Lorie Logan suggested that, in the medium term, the Fed should consider buying more short-term securities to align its portfolio with Treasury issuance, according to Bloomberg.
Bullish Momentum for Gold Despite Short-Term Consolidation
Gold prices gained slight momentum during the day, though the metal remains constrained within a narrow trading range in the short term. However, the overall bullish outlook remains intact. Gold is holding above the key 100-day Exponential Moving Average (EMA), and the 14-day Relative Strength Index (RSI) is above 64.0, signaling a potential continuation of the upward trend.
While gold’s all-time high of $2,957 may prove difficult to surpass, a breakout above this level could push prices toward the next resistance at $2,980, the upper boundary of the Bollinger Band, and potentially toward the psychological $3,000 mark.
On the downside, February 25’s low of $2,888 serves as the first support level for gold. A deeper pullback could see the metal testing $2,795, the lower limit of the Bollinger Band, with key support around $2,718 at the 100-day EMA.
Conclusion
In conclusion, gold prices remain resilient amid ongoing trade tensions and inflation concerns tied to the US tariff plans. While short-term fluctuations are likely, the precious metal’s long-term outlook remains bullish, supported by safe-haven demand. Market participants will be closely monitoring upcoming economic data and Fed comments for clues on how the US central bank’s monetary policy could influence the gold market in the coming months.