Gold prices remained steady on Wednesday, holding close to $2,919, as traders awaited key economic data and speculated on potential trade policy shifts under President Donald Trump. The precious metal’s price had been fluctuating around the $2,910 mark during the North American session, amid news about potential changes to tariffs related to the USMCA free trade agreement, particularly on automobiles. However, uncertainty over these developments kept XAU/USD largely unchanged.
Economic Data and Market Reactions
The Federal Reserve’s release of the Beige Book highlighted that while overall economic activity has risen, prices are higher due to Trump’s trade policies, which kept traders on edge. In terms of employment, ADP reported that private hiring in February slowed significantly, with only 77,000 new jobs added, well below the forecast of 140,000 and far behind January’s robust gain of 186,000. This slowdown raised concerns about the strength of the labor market.
Meanwhile, February’s ISM Services PMI showed continued expansion in business activity, though inflation concerns persisted as the Prices Paid sub-component surged above 60, suggesting that higher costs for producers could potentially lead to a second wave of inflation.
On the macroeconomic front, recession fears were amplified by the Atlanta Fed’s GDPNow model, which downgraded its Q1 2025 GDP growth forecast to -2.8%, a significant revision from the earlier estimate of 1.6%.
Geopolitical Factors and Impact on Gold
Geopolitical news also played a role in gold price dynamics. Talks between Ukrainian President Zelensky’s aide and the U.S. National Security Advisor about peace negotiations could have implications for the broader global market, potentially leading to reduced safe-haven demand for gold. Additionally, higher U.S. Treasury bond yields continued to pressure gold, with the 10-year Treasury note rising by four basis points to 4.28%, and real yields also increasing slightly.
Looking Ahead: Nonfarm Payrolls and Market Movements
Traders are bracing for the release of February’s Nonfarm Payrolls report on Friday, which is expected to show the addition of 160,000 jobs to the U.S. workforce. This data could provide further insight into the labor market’s health and its potential impact on gold prices.
Meanwhile, U.S. Treasury yields continued to climb, with the 10-year TIPS yield increasing to 1.935%. Money market traders have adjusted their expectations for Federal Reserve rate cuts in 2025, pricing in 71.5 basis points of easing, down from 81 basis points on Tuesday.
Gold Price Technical Outlook: Holding Above $2,900
Gold prices consolidated on Wednesday following two consecutive bullish days. Despite this pause, momentum remains upward, with the Relative Strength Index (RSI) indicating bullish momentum. The path of least resistance for gold appears to be a continuation of its uptrend.
Gold’s next resistance levels are at $2,950, followed by the record high of $2,954. A breakout above these levels could bring the $3,000 mark into focus. However, if gold closes below $2,900, it could signal the end of the uptrend and open the door for a potential pullback. The first support level is at the February 28 low of $2,832, followed by the $2,800 figure.
In conclusion, gold’s price remains firm despite mixed U.S. data, and traders are closely watching upcoming economic indicators, including jobless claims and the Nonfarm Payrolls report, to gauge the outlook for inflation and the broader economy.
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