Gold prices (XAU/USD) fell below the $2,900 threshold during the first half of Monday’s European session, moving closer to the lower end of a nearly week-old trading range. The decline comes as investors shift focus from Friday’s weaker US jobs report, with the US Dollar (USD) showing a modest recovery from its lowest point since November. This rebound in the USD has emerged as a key factor pressuring gold prices.
Despite the USD’s bounce, expectations that the Federal Reserve (Fed) will reduce interest rates multiple times this year, coupled with a significant drop in US Treasury bond yields, are likely to prevent USD bulls from making fresh bets. Additionally, concerns over the economic impact of US President Donald Trump’s trade policies, including the potential fallout from ongoing global trade tensions, may provide some support to gold, limiting its losses.
Market Movers and the Gold Price Outlook
Uncertainty surrounding Trump’s trade policies continues to fuel investor caution, benefitting gold prices at the start of the week. There are growing concerns that the president’s protectionist tariffs could slow US economic growth, potentially forcing the Fed to resume rate cuts as early as June.
In a fresh twist, Trump indicated that new tariffs on Canadian goods could be delayed or imposed this week, following a temporary suspension of a 25% tariff on certain goods from Canada and Mexico in compliance with the US–Mexico–Canada Agreement. Fed Chair Jerome Powell remarked on Friday that the economic uncertainty stemming from the Trump administration’s policies remains high, while San Francisco Fed President Mary Daly stated that rising uncertainty could dampen demand in the US economy, though she noted it does not yet justify a change in interest rate policy.
Additionally, February’s US jobs report, released on Friday, revealed that job growth slowed, reinforcing expectations of continued Fed policy easing. Nonfarm Payrolls showed an increase of 151,000 jobs, falling short of the 160,000 forecast, while the previous month’s data was revised downward. The unemployment rate unexpectedly rose to 4.1% from 4.0%, overshadowing a modest increase in Average Hourly Earnings. These factors have fueled market speculation that the Fed may implement up to three rate cuts this year.
In response, US Treasury bond yields have continued to decline, further placing the USD on the defensive. Despite this, gold, a non-yielding asset, has struggled to attract significant buyers, signaling caution for bullish investors.
Technical Outlook for Gold
From a technical standpoint, gold has demonstrated resilience below the $2,900 mark. Oscillators on the daily chart, while losing momentum, remain in positive territory. However, recent failed attempts to break through the $2,925-$2,930 resistance zone suggest that traders should wait for clear, strong buying signals before committing to new bullish positions. Should gold prices break decisively above this range, they may target the all-time high of $2,956 reached in late February.
On the downside, if gold falls below the $2,895-$2,900 support zone, it could trigger further technical selling, driving the price toward the $2,860-$2,858 region. A deeper decline could bring gold closer to the February 28 swing low around $2,833-$2,832, and potentially even the key $2,800 mark.
Conclusion
Gold prices face pressure from a recovering USD and concerns over the broader economic impact of Trump’s trade policies. While gold has shown resilience, its technical outlook suggests that caution is warranted, especially as it hovers near critical support levels. Investors will be closely monitoring the Federal Reserve’s next moves and any further developments in global trade relations for guidance on the precious metal’s next direction.