Gold prices surged on Tuesday, clearing the $2,900 mark as the ongoing trade tensions fueled demand for the precious metal, which is seen as a safe-haven asset. Despite strong U.S. job data, traders continued to flock to bullion, with XAU/USD reaching $2,917, marking an increase of over 1%.
Investor sentiment has been bolstered by easing trade tensions between Canada and the U.S., as both countries stepped back from escalating tariff threats. However, fears of an economic slowdown in the U.S. have been exerting downward pressure on Treasury yields and the U.S. dollar, further supporting gold prices.
In the U.S., President Donald Trump’s tariffs on aluminum and steel imports are set to take effect on Wednesday, adding to market uncertainty. Meanwhile, the U.S. Bureau of Labor Statistics (BLS) reported an increase in job openings in February, signaling ongoing strength in the labor market.
In breaking news from Saudi Arabia, U.S. Secretary of State Marco Rubio confirmed that Ukraine is ready to accept a ceasefire proposal. Ukrainian President Volodymyr Zelenskyy stated, “It is up to the U.S. now to convince Russia to agree to a ceasefire.” While this development could be a potential headwind for gold prices, as geopolitical tensions often drive demand for the metal, it remains to be seen how the situation will evolve.
Looking ahead, traders are focused on the upcoming U.S. Consumer Price Index (CPI) release on Wednesday, followed by the Producer Price Index (PPI) on Thursday, which could provide further insight into inflationary pressures and influence gold’s direction.
Market Movers: Gold Unaffected by Rising U.S. Yields
In other market news, the U.S. 10-year Treasury bond yield rose six basis points to 4.282%, with traders speculating on potential interest rate cuts by the Federal Reserve. The U.S. real yield, as measured by the 10-year Treasury Inflation-Protected Securities (TIPS) yield, also climbed by five-and-a-half basis points to 1.963%, which generally acts as a headwind for non-yielding assets like gold.
The Atlanta Federal Reserve’s GDP Now model predicts a 2.4% contraction in the first quarter of 2025, the first negative growth since the COVID-19 pandemic. This outlook has added to recession fears, further supporting demand for gold.
The U.S. Job Openings and Labor Turnover Survey (JOLTS) reported an increase in job openings to 7.740 million in January, surpassing expectations of 7.63 million, which suggests resilience in the labor market despite broader economic concerns.
On the international front, the People’s Bank of China (PBoC) has continued to add to its gold reserves, purchasing 10 tonnes in the first two months of 2025. The National Bank of Poland (NBP) was the largest buyer during this period, increasing its gold reserves by 29 tonnes, the largest purchase since June 2019.
XAU/USD Technical Outlook: Gold Eyes $3,000
From a technical perspective, gold remains in an uptrend, but to extend its rally, buyers must clear the March 7 high of $2,930. A successful breach of this level could open the door for a test of the all-time high of $2,954, followed by the psychological $3,000 mark.
On the downside, if XAU/USD falls below $2,900, support would be found at $2,850, followed by the February 28 low of $2,832, and further at $2,800.
Gold continues to be influenced by a combination of geopolitical developments, economic data, and central bank actions, making it a key asset to watch in the coming weeks.
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