Gold prices (XAU/USD) continued to climb during the first half of the European session, approaching the upper end of its weekly trading range. The US Dollar (USD) remains under pressure, driven by growing expectations that the Federal Reserve (Fed) will cut interest rates multiple times in 2025 due to concerns over a slowdown in US economic growth. As a result, the USD remains near a multi-month low, providing a favorable backdrop for gold, a non-yielding asset.
The uncertainty surrounding US President Donald Trump’s trade policies, particularly their potential impact on the global economy, is also supporting gold’s safe-haven appeal. However, the XAU/USD pair has remained within a narrow trading range for several days, as traders await the release of the highly anticipated US Nonfarm Payrolls (NFP) report before making significant directional bets. Despite this, gold is on track to post strong weekly gains, driven largely by the weakening US Dollar.
Key Market Drivers: Trade War Fears, Economic Uncertainty, and a Weaker USD
Concerns over the potential consequences of President Trump’s trade tariffs on the US economy continue to weigh on the US Dollar, which has fallen to its lowest level since November 11. These concerns have helped buoy gold prices. Recently, Trump exempted goods from Canada and Mexico that comply with the US–Mexico–Canada Agreement from newly imposed 25% tariffs, which went into effect earlier this week. This decision follows another shift in his trade policy, adding to market uncertainty.
Meanwhile, expectations of further policy easing by the Federal Reserve, in light of potential economic slowdown, continue to undermine the USD and benefit gold. Philadelphia Fed President Patrick Harker highlighted growing risks to economic growth and inflation, although he noted that the economy is still expanding with low unemployment. Atlanta Fed President Raphael Bostic echoed concerns over economic uncertainty, adding that the central bank must remain vigilant to factors that could affect prices and employment.
Fed Governing Board Member Christopher Waller, however, expressed resistance to a rate cut at the March meeting, although he acknowledged that cuts could be considered later in the year if inflationary pressures continue to ease.
On the economic front, US Initial Jobless Claims for the week ending March 1 fell more than expected to 221,000, but this did little to strengthen the USD or affect the price of gold. Traders are now focused on the upcoming US Nonfarm Payrolls (NFP) report, which is expected to show the creation of 160,000 new jobs in February and an unchanged unemployment rate of 4%.
Technical Outlook: Gold Eyes Key Resistance Levels
From a technical perspective, gold has shown resilience below the $2,900 mark, signaling caution for bearish traders, particularly with positive momentum indicators on the daily chart. A break below this level could send prices toward the $2,860-2,858 range, with intermediate support near $2,884-2,883. Further downside could lead gold to revisit last week’s low around $2,833-2,832 before potentially testing the $2,800 support level.
On the upside, the $2,926-2,930 zone has emerged as a key resistance. A breakout above this level could pave the way for a retest of gold’s all-time high around $2,956, reached in February. Continued upward momentum could trigger further buying, supporting the continuation of the established uptrend that has been in place for the past three months.
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