The gold price (XAU/USD) has regained some ground after hitting a one-week low in the previous session, driven by ongoing trade war concerns and heightened uncertainty in global markets. As tensions around US President Donald Trump’s tariff plans continue to grow, gold, a traditional safe-haven asset, has attracted some buyers seeking protection against economic instability.
Analysts suggest that Trump’s tariff plans could contribute to rising inflation concerns at the US Federal Reserve (Fed). This may prompt the central bank to maintain higher interest rates for an extended period, which could limit gold’s potential upside. Higher interest rates reduce the appeal of non-yielding gold, as investors typically shift towards assets offering better returns.
Later today, the US New Home Sales data for January will be released, with market participants watching closely for any signs of economic shifts. Additionally, Fed officials Raphael Bostic and Thomas Barkin are scheduled to speak, potentially offering more insights into the Fed’s stance on interest rates. On Friday, investors will be focused on the release of the US Personal Consumption Expenditures (PCE) Price Index for January, a key inflation indicator.
Gold Price Gains Amid Persistent Trade War Fears
Amid ongoing trade war fears, the gold price has seen renewed buying interest. Late Tuesday, President Trump signed another Executive Order, directing the US Commerce Department to launch an official probe into Copper markets. Furthermore, Trump reaffirmed that tariffs on Canadian and Mexican imports would remain on schedule, despite both countries’ efforts to enhance border security and curb fentanyl trafficking ahead of the March 4 deadline.
US consumer confidence took a significant hit, falling to 98.3 in February, down from 105.3 previously, marking the largest decline since August 2021. This shift in sentiment, according to the Conference Board, may add to concerns about the broader economic outlook.
Fed Officials Weigh In on Interest Rates and Inflation Outlook
Richmond Fed President Thomas Barkin indicated that the central bank will adopt a wait-and-see approach regarding interest rate policy until inflation returns to the Fed’s 2% target. Meanwhile, Dallas Fed President Lorie Logan suggested that the Fed may consider purchasing more shorter-term securities in the medium term to adjust its portfolio in response to Treasury issuance trends.
These comments underscore the Fed’s cautious approach in navigating inflationary pressures while managing interest rates in the face of ongoing economic challenges, which could have implications for gold prices going forward.
Gold Price Holds Bullish Momentum Despite Short-Term Consolidation
The gold price has edged higher today, but remains within a narrow trading range in the short term. However, the bullish outlook for gold remains intact, with the price holding above the critical 100-day Exponential Moving Average (EMA). This technical indicator suggests that the path of least resistance remains upward, with the 14-day Relative Strength Index (RSI) standing above the midline near 64.0, further supporting the bullish sentiment.
Gold Price Technical Levels to Watch
The all-time high for gold stands at $2,957, which could present a significant resistance level for the metal. A break above this level may trigger a move toward the next bullish target at $2,980, the upper boundary of the Bollinger Band, followed by the psychological $3,000 level. If gold manages to surpass these levels, it could set the stage for further upward movement.
On the downside, $2,888, the low from February 25, serves as an initial support level for gold. A sustained decline below this level could open the door for further losses, potentially targeting $2,795, the lower boundary of the Bollinger Band, and the key 100-day EMA at $2,718.
Gold Price Outlook Amid Economic and Political Uncertainty
As trade war concerns and inflation fears continue to drive market uncertainty, the gold price is likely to remain volatile, with investors closely monitoring developments in the US Federal Reserve’s interest rate policy and global trade tensions. While short-term consolidation may persist, the broader bullish outlook for gold remains supported by its status as a safe-haven asset during times of economic and political turmoil.
With ongoing geopolitical risks and inflationary pressures, gold continues to attract attention as a protective asset, and investors will likely look for any signs of further market volatility to drive demand for the precious metal in the weeks ahead.
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