Gold prices (XAU/USD) continued their steady rise through the first half of the European session, climbing closer to the top end of its weekly range. The ongoing weakness of the US Dollar (USD), driven by mounting expectations that the Federal Reserve (Fed) will cut interest rates multiple times in 2025 due to concerns over slowing US economic growth, has been a major factor supporting the non-yielding yellow metal. This has kept the USD near a multi-month low and provided a tailwind for gold.
Additionally, the uncertainty surrounding US President Donald Trump’s trade policies and their potential impact on the global economy has further bolstered gold’s safe-haven appeal. However, the XAU/USD pair remains confined within a multi-day range as traders hold off on making directional bets, opting to wait for the crucial US Nonfarm Payrolls (NFP) report before making any significant moves. Despite this, gold is on track to register strong weekly gains due to the continued weakness in the USD.
Market Movers: US Trade Tariffs, Economic Fears, and a Weaker USD
The persistent concerns over the effects of US President Donald Trump’s trade tariffs on the US economy have kept the US Dollar near its lowest levels since November 11. This situation has been beneficial for gold, with traders remaining cautious amid trade war fears. The uncertainty around Trump’s trade policies intensified after he exempted goods from Canada and Mexico that comply with the US–Mexico–Canada Agreement (USMCA) from the steep 25% tariffs. These tariffs were initially imposed earlier this week, but the exemption will last for one month.
Furthermore, traders are increasingly pricing in the possibility of the Federal Reserve easing monetary policy further amid concerns about an economic slowdown in the US. This expectation has weighed on the USD and supported gold prices. Philadelphia Fed President Patrick Harker highlighted growing risks to economic growth and inflation, though he noted that the economy is still expanding with low unemployment. Meanwhile, Atlanta Fed President Raphael Bostic described the US economy as being in “incredible flux,” emphasizing the difficulty in predicting the future direction of economic conditions. He also stressed that the central bank must remain attentive to factors that impact prices and employment.
Fed Governing Board Member Christopher Waller, however, indicated that he strongly opposes a rate cut at the upcoming March meeting, although he acknowledged that cuts later in the year could still be on the table if inflationary pressures continue to ease.
On the data front, US Initial Jobless Claims for the week ending March 1 fell to 221K, exceeding expectations, but this did little to support the USD or influence gold prices. Market participants are now focusing on the release of the US Nonfarm Payrolls report, which is expected to show the addition of 160,000 jobs in February and a steady unemployment rate of 4%.
Gold’s Technical Outlook: Key Resistance and Support Levels
From a technical perspective, gold has shown resilience below the key $2,900 level, indicating caution among bearish traders due to positive signals from daily chart oscillators. If the price falls below $2,900, it could head towards the $2,860-2,858 horizontal zone, with intermediate support around $2,884-2,883. A further decline could bring the price to last week’s swing low near $2,833-2,832, with a potential drop to the $2,800 level.
On the upside, the $2,926-2,930 zone has emerged as a key resistance level. If gold manages to break above this zone, it could target the all-time peak of around $2,956, which was reached in February. A sustained rally above this level would signal a renewed uptrend, continuing the strong bullish momentum witnessed in the past three months.
Conclusion
Gold continues to benefit from a weak US Dollar, uncertainty surrounding trade policies, and concerns over economic growth. While the price remains within a defined range, the upcoming US Nonfarm Payrolls report will likely provide further direction for the yellow metal. With a positive technical outlook and a bearish USD, gold remains on track to finish the week with strong gains. However, traders will need to watch closely for any breakouts or reversals that could reshape the market’s trajectory.