Gold prices (XAU/USD) continued their sideways movement at the start of the new week, remaining within a multi-day trading range during the early European session on Monday. Despite this, gold remains near its all-time high, touched last week, as market uncertainty persists around US President Donald Trump’s trade tariffs and their potential global economic impact. Additionally, geopolitical tensions and a renewed weakness in the US Dollar (USD) have supported the precious metal.
However, growing expectations that the Federal Reserve (Fed) will maintain higher interest rates due to persistent inflation are limiting bullish sentiment for gold. Investors are waiting for the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday. This key data, the Fed’s preferred inflation gauge, will provide further guidance on interest rate decisions and influence the USD and gold’s price direction in the short term.
Gold continues to perform well near its record high due to increasing global trade tensions. Trump’s tariffs, including a 25% tariff on steel and aluminum and an additional 10% on Chinese imports, have contributed to concerns about economic fallout, helping gold to secure its eighth consecutive weekly gain and a fresh record high.
Recent data has raised concerns about US economic growth, driving the USD to its lowest level since December 10, further supporting gold. A flash S&P Global US Composite PMI showed a drop to 50.4 in February, down from 52.7 in January, reflecting weaker private sector activity amid concerns over Trump’s tariff plans. Additionally, the University of Michigan’s Consumer Sentiment Index fell to a 15-month low of 64.7 in February, down from 71.7 the previous month. Households also reported rising inflation expectations of 4.3%, the highest since November 2023, increasing gold’s appeal as a hedge against inflation.
Stronger US inflation figures and hawkish Federal Reserve minutes suggest that interest rates will remain high for an extended period, which could limit further upside for gold. Friday’s PCE report will be pivotal in shaping market expectations regarding the Fed’s rate decisions. Other significant US economic data, such as the Q4 GDP report and Durable Goods Orders, will also impact gold and USD trends this week.
From a technical standpoint, gold’s daily Relative Strength Index (RSI) is above 70, signaling slightly overbought conditions, which may deter new bullish positions. However, any upward movement beyond the $2,950-$2,955 range could encourage further buying and extend gold’s recent uptrend. On the other hand, any price pullbacks may attract buyers around the $2,920-$2,915 region. If gold breaks below the $2,880 mark, it could fall further to the $2,860-$2,855 area, with support levels extending toward $2,800.
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