Gold prices rose by 0.23%, trading near $2,939 at the time of writing, driven by trade war concerns, a weak US Dollar, and falling US Treasury bond yields. The demand for gold was fueled by uncertainty surrounding global trade and risk aversion, which led investors to seek safe-haven assets like gold and the Japanese Yen.
The Federal Reserve’s Meeting Minutes revealed concerns about rising prices due to Trump’s trade and immigration policies. As a result, the Fed decided to keep rates unchanged at the January meeting. Some Fed speakers have expressed caution, with Atlanta Fed President Raphael Bostic predicting two rate cuts this year and St. Louis Fed President Alberto Musalem highlighting increased risks of inflation exceeding the Fed’s 2% goal. Chicago’s Fed President Austan Goolsbee noted that Trump’s tariff policies are keeping the Fed nervous.
US job data was softer than expected, and Gold traders are now eyeing the release of S&P Global Flash PMIs.
Market Drivers:
- US President Donald Trump’s announcement of tariffs on cars, automobiles, and computer chips, and potential tariffs on other commodities.
- US Initial Jobless Claims exceeding forecasts.
- US 10-year Treasury bond yield falling three basis points.
- US real yields dropping three basis points.
- Central bank purchases of gold rising more than 54% YoY following Trump’s victory.
- Money market fed funds futures pricing in 41.5 basis points of easing by the Fed in 2025.
XAU/USD Technical Outlook:
The gold price uptrend remains intact, but the failure to clear the $2,950 figure could lead to a pullback. The Relative Strength Index (RSI) suggests that sellers are gaining momentum. If XAU/USD falls, support levels are at $2,877 and $2,864. If it rises past $2,954, resistance levels are at $2,950 and $3,000.
