- Gold prices fell slightly during Friday’s Asia session.
- Trade war concerns and falling US Treasury are underpinning precious metals.
- Investors are preparing to unveil a private US sale in January, which will be released later on Friday.
Gold (XAU/USD) continues its upward momentum during Friday’s Asian trading session, supported by increasing concerns over US President Donald Trump’s tariff proposals. Additionally, a drop in US bond yields across the board is providing further support to the precious metal.
However, expectations that the US Federal Reserve will maintain its hawkish approach and keep interest rates higher for an extended period may put downward pressure on gold. Traders will also be watching the upcoming release of US Retail Sales data for January, set to be announced later on Friday.
Gold Prices Rise Amid Growing Concerns of a Global Trade War
- Trump unveiled a roadmap on Thursday for charging reciprocal tariffs against every country that imposes duties on US imports.
- However, commerce and economics officials need to study reciprocal tariffs against countries that place tariffs on US goods, and it will not be due until April 1.
- The US Producer Price Index (PPI) rose 3.5% YoY in January, followed by the 3.3% increase seen in December, according to the US Bureau of Labor Statistics on Thursday. This reading came in above the market expectation of 3.2%.
- The annual core PPI rose 3.6% YoY in January, compared to 3.7% (revised from 3.5%) prior, beating the estimation of 3.3%.
- The US Initial Jobless Claims for the week ending February 8 fell to 213K, compared to the previous week of 220K (revised from 219K), below the market consensus of 215K.
Gold’s Uptrend Remains Strong, But Overbought RSI Cautions Bullish Traders
From a technical perspective, gold continues to exhibit a strong uptrend on the daily chart, as the price remains above the key 100-day Exponential Moving Average (EMA). However, the 14-day Relative Strength Index (RSI) is in the overbought zone, surpassing the 70.0 mark, which suggests caution before expecting further gains.
The first resistance level for gold is at the $2,942-$2,943 range, where it reached its all-time high on Tuesday. If the price extends its upward movement, it could test $2,955, the upper boundary of the Bollinger Bands. A clear breakout above this level might open the door to the psychological $3,000 level.
On the downside, initial support is found at $2,864, the low of February 12. A further drop could lead to a test of $2,744, the January 29 low. The critical support zone lies between $2,680 and $2,685, where the lower boundary of the Bollinger Bands and the 100-day EMA converge.
