Gold prices (XAU/USD) continued to decline during the first half of Thursday’s European session, dropping to a two-week low around the $2,880 region. The decline was supported by a modest rise in US Treasury bond yields, which helped the US Dollar (USD) recover slightly from its lowest level since December 10. The strength of the dollar, combined with a generally positive sentiment in equity markets, contributed to downward pressure on the precious metal.
Despite this, there is still caution among bearish traders due to ongoing uncertainties surrounding US President Donald Trump’s tariff plans and trade war concerns. These factors make it difficult to confirm that gold has reached its near-term peak. Additionally, growing expectations that the Federal Reserve (Fed) may cut interest rates further, amid signs of a slowing US economy, could limit further losses for the non-yielding asset. Traders are now awaiting Thursday’s US economic data for fresh market direction.
Rising US Bond Yields and Stronger USD Weigh on Gold Prices
Gold prices have remained under pressure as the US Dollar continues to strengthen, bolstered by a bounce in US Treasury bond yields. This has exerted downward pressure on gold during the Asian trading session on Thursday. President Trump’s recent comments on tariff delays have also affected market sentiment. On Wednesday, he suggested that new tariffs on imports from Mexico and Canada could be postponed until April 2, extending the original deadline of March 4. However, a White House official clarified that the tariffs remain in effect as scheduled, pending further review of measures to curb migrant flow into the US.
Trump also announced plans for a 25% tariff on European Union imports, adding to the ongoing uncertainty and providing support for safe-haven assets like gold.
The market’s focus is now on expectations for further rate cuts by the Federal Reserve, spurred by recent US macroeconomic data that points to a cooling economy and concerns about growth. On Wednesday, Atlanta Fed President Raphael Bostic indicated that the central bank may maintain current interest rates to continue addressing inflation, which, despite progress, remains high. The release of the US Personal Consumption Expenditures (PCE) Price Index on Friday, a key inflation measure, will likely offer further guidance on the Fed’s future rate decisions.
Thursday’s US economic reports—including preliminary Q4 GDP data, Durable Goods Orders, Pending Home Sales, and Weekly Initial Jobless Claims—could also influence short-term market movements. Additionally, speeches from influential Federal Open Market Committee (FOMC) members are expected to provide more insights into potential policy easing, affecting USD demand and creating trading opportunities for the XAU/USD pair.
Gold Likely to Attract Dip-Buying Near Key Support Levels
Technically, the gold price is expected to find support near the $2,860-2,855 region, with immediate support at the $2,888 level and further support around $2,878. A failure to hold these levels could lead to a more significant decline, with the price potentially dropping to the $2,834 area and the key $2,800 mark.
Conversely, if gold prices move above the immediate resistance level of $2,920, selling pressure could emerge near the swing high around $2,930. A sustained break above this level could push prices higher, targeting the $2,950-2,955 region, or even the record high set earlier this week.
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