- Gold prices recover from close to all summits, but the disadvantages appear to be limited.
- Concerns about Trump’s trade tariffs and the world trade war should support bullion.
- The underlying tense bear sensation helps limit the loss of Xau/USD couples.
Gold (XAU/USD) faces selling pressure near the $2,950 level during the Asian trading session on Friday, pulling back from its all-time high reached the previous day. The slight intraday decline appears to be driven by profit-taking, given the overbought conditions on the daily chart, rather than any major fundamental shift. However, a significant correction seems unlikely as concerns over potential global trade tensions—sparked by US President Donald Trump’s tariff policies—continue to support demand for the safe-haven metal.
Additionally, expectations that Trump’s trade policies could fuel inflation may further bolster gold, which is widely regarded as a hedge against rising prices. Beyond this, lingering geopolitical risks, uncertainty over US consumer strength, and a weaker US Dollar (USD) are likely to provide downside support for the precious metal. These factors could encourage dip-buying at lower price levels. Despite the slight pullback, XAU/USD remains on track to secure gains for the eighth consecutive week, extending its two-month-long uptrend.
Gold Bulls Take Profits, but Trade War Concerns Sustain Support
- Uncertainty related to US President Donald Trump’s endangered tariffs and impact on the global economy increased the Safe Haven Gold Award on Thursday to a new record near the region.
- Since taking office on January 20, Trump has had a 25% tariff and an additional 10% tariff on Chinese imports, and is also planning to announce new tariffs next month or earlier.
- In the meantime, soft sales forecasts from Walmart have questioned the underlying economic strength as Trump’s political steps increase inflation and undermine consumer costs.
- Hopes for a peace deal between Russia and Ukraine seem to have faded in the wake of intensifying Ukrainian drone attacks on Russian Oil pumping stations, which could further act as a tailwind for the precious metal.
- The US Dollar languishes near its lowest level since December 10 amid bets for more interest rate cuts by the Federal Reserve and might turn out to be another factor that could lend support to the XAU/USD pair.
- Fed officials, however, remain wary of future interest rate cuts amid still-sticky inflation, which, in turn, prompts some profit-taking around the non-yielding yellow metal amid slightly overbought conditions.
- St. Louis Fed President Alberto Musalem warned on Thursday that rising inflation expectations combined with the risk of stubborn stagflation could create a double challenge for the US economy.
- Earlier on Thursday, Fed Board Governor Adriana Kugler said that US inflation still has some way to go to reach the central bank’s 2% target and that its path toward that goal continues to be bumpy.
- In contrast, the Atlanta president has gained a more general tone this year, looking at space for two more tariff cuts, but many of them rely on developing economic conditions.
- Traders are currently looking forward to Flash PMI Prints to gain new insights into Global Economic Health. This should provide driving force for the product over the weekend.
- Separately, US economic dockets with the release of existing home sales data and Michigan’s revised consumer release index could contribute to creating short-term opportunities.
Gold Price Technical Outlook Signals Potential Dip-Buying Near $2,900
From a technical standpoint, the daily Relative Strength Index (RSI) remains close to 70, signaling potential overbought conditions and caution for bullish traders. However, the recent breakout above the $2,928-$2,930 resistance zone—marking the upper boundary of a short-term trading range—indicates that the overall trend remains upward. As a result, any pullback is likely to be viewed as a buying opportunity near $2,900.
On the flip side, bullish traders may wait for a brief consolidation phase followed by a sustained move beyond $2,950-$2,955 before initiating fresh positions. Despite short-term fluctuations, the overall technical setup remains favorable for an extension of the two-month-long uptrend in gold prices.
