Gold price (XAU/USD) is trading with a bullish bias, staying close to the historic high of $3,005, reached last Friday. While the precious metal has retreated slightly, its upside potential remains intact due to a combination of strong fundamental and technical factors.
Key Drivers for Gold Price Movement
Geopolitical Tensions and Safe-Haven Demand
Gold’s appeal as a safe-haven asset has been reinforced by heightened geopolitical tensions worldwide.
Over the weekend, conflict escalated between the United States and Yemen, following large-scale US airstrikes on Houthi militant targets. In retaliation, the Iran-backed Houthis launched attacks on US vessels in the Red Sea, prompting US President Donald Trump to issue a stark warning that “hell will rain down” if hostilities continue.
Meanwhile, in the Middle East, Israeli military operations in Gaza resulted in at least 15 Palestinian casualties, further fueling geopolitical instability.
Additionally, US envoy Steve Witkoff revealed that President Trump is expected to engage with Russian President Vladimir Putin this week, following the Kremlin’s endorsement of a 30-day ceasefire with Ukraine.
These geopolitical developments continue to drive investors toward Gold as a hedge against uncertainty, keeping its price elevated.
Federal Reserve’s Monetary Policy Outlook
Markets are keenly awaiting the US Federal Reserve’s (Fed) policy decision on Wednesday, which could have a significant impact on Gold’s trajectory.
Investors widely expect the Fed to continue its easing cycle, as inflation concerns persist and the global economic outlook remains fragile.
A dovish Fed stance could weaken the US Dollar (USD) further, making Gold more attractive for non-USD buyers.
China’s Economic Stimulus and Strong Data
Gold is also benefiting from China’s pro-growth policies, as the country remains the world’s largest consumer of the metal.
On Sunday, China unveiled fresh stimulus measures aimed at boosting consumption and raising incomes, which is expected to support demand for Gold.
Additionally, strong Chinese economic data for January and February has further strengthened investor confidence in the yellow metal.
US Retail Sales Data in Focus
Despite Gold’s bullish outlook, near-term volatility could arise ahead of the upcoming US Retail Sales report.
A weaker-than-expected retail sales print could reinforce expectations of a Fed rate cut, further lifting Gold prices.
Conversely, a strong report might provide temporary support for the USD, triggering a short-term pullback in Gold.
Technical Outlook: XAU/USD Eyes Key Resistance at $3,000
Daily Chart Analysis
Ascending Triangle Breakout: Gold’s breakout from an ascending triangle formation last Thursday signals further upside potential.
Psychological Resistance at $3,000: Bulls need to secure a daily close above $3,000 to extend the rally toward the $3,050 target.
RSI Near Overbought Zone: The 14-day Relative Strength Index (RSI) is hovering near 67, indicating strong momentum but also raising the risk of a pullback.
Key Support Levels to Watch
$2,956 – Previous resistance-turned-support level.
$2,923 – 21-day Simple Moving Average (SMA).
$2,906 – Ascending triangle support line, acting as the final defense for bulls.
Conclusion
Gold’s fundamental and technical outlook remains bullish, with geopolitical risks, Fed expectations, and Chinese demand driving prices higher. However, near-term price action could be influenced by US Retail Sales data and the Fed’s policy update on Wednesday.
Should Gold secure a breakout above $3,000, it could open the door for a rally toward $3,050 and beyond. On the flip side, any dips toward support levels may be viewed as buying opportunities by investors.
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