Gold prices have maintained an upward trajectory, edging closer to record highs as market uncertainties fuel demand for safe-haven assets. The latest rally reflects growing concerns over trade tensions, inflationary pressures, and potential Federal Reserve rate cuts. While the U.S. dollar has shown some resilience, its modest strength has done little to deter bullish momentum in gold. In this analysis, financial experts from Fibovest explore the key forces shaping gold prices and what traders should watch for in the coming weeks.
image from finance.yahoo.com
Gold’s Performance: Sustained Gains Amid Market Uncertainty
The price of gold (XAU/USD) has seen consistent gains, climbing for the 3rd consecutive session and reaching a 2-week peak. Economic uncertainty has largely driven investor sentiment, particularly surrounding global trade policies. With the potential for a slowdown in economic activity due to heightened tariffs, many market participants have turned to gold as a reliable store of value.
Additionally, expectations of multiple Federal Reserve interest rate cuts this year have bolstered gold’s appeal. Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors. Current market pricing suggests that traders anticipate three rate cuts in the upcoming months, reflecting broader concerns over slowing economic growth.
Trade Tensions and Inflation Concerns Boost Safe-Haven Demand
Trade policy remains a significant factor influencing market sentiment. Recent tariff increases on steel and aluminum imports and retaliatory measures from key global economies have heightened investor concerns about prolonged economic disruptions. The European Union has announced tariffs on $28 billion worth of U.S. goods, while Canada has implemented its own 25% tariff on more than $20 billion worth of American imports.
The uncertainty surrounding these trade measures has driven demand for traditional safe-haven assets, with gold standing out as a primary beneficiary. This trend is further supported by softening inflation data in the U.S. The latest Consumer Price Index (CPI) report revealed a greater-than-expected decline, with headline inflation easing to 2.8% year-over-year in February, down from 3% in the previous month.
Core inflation, which excludes food and energy prices, also declined from 3.3% to 3.1%, reinforcing expectations that the Federal Reserve may adopt a more accommodative monetary policy stance.
image from editorial.fxsstatic.com
U.S. Dollar’s Influence: A Balancing Act
Despite gold’s sustained rally, the U.S. dollar has regained some strength, preventing even sharper gains in the precious metal. The U.S. Dollar Index, which tracks the currency’s performance against a basket of peers, has rebounded slightly from its lowest level since mid-October. A stronger dollar typically makes gold more expensive for foreign investors, limiting immediate upside momentum.
However, the broader market environment suggests that gold’s uptrend remains intact. The dollar’s recent uptick is viewed as a short-term adjustment rather than a fundamental shift. As long as expectations for Federal Reserve rate cuts persist, the dollar’s strength may remain in check, allowing gold prices to sustain their bullish outlook.
Key Technical Levels to Watch
From a technical standpoint, gold has successfully breached the $2,928–$2,930 resistance zone, signaling the potential for further upside movement. The next key target for traders is the all-time high near $2,956. If buying momentum continues, this level could be tested in the near future.
Technical indicators on the daily chart show no immediate signs of overbought conditions, suggesting that there is still room for further appreciation. A sustained push above $2,956 would likely open the door for an extended rally.
On the downside, immediate support is now positioned around the $2,900 level, followed by the $2,860 mark. A break below these levels could trigger a deeper retracement, with potential declines toward $2,833–$2,832. However, given the prevailing fundamental backdrop, any pullbacks may be viewed as buying opportunities rather than a shift in the broader trend.
Market Outlook: What’s Next for Gold?
Looking ahead, traders will be closely monitoring upcoming economic data releases, particularly the U.S. Producer Price Index (PPI), which could offer further insights into inflation trends. A weaker-than-expected PPI reading may reinforce expectations for Federal Reserve rate cuts, providing additional support for gold.
Geopolitical developments will also play a crucial role in shaping gold’s trajectory. If trade tensions continue to escalate, or if economic data points to a sharper slowdown, gold prices could push higher as investors seek refuge from market volatility.
Conclusion
Gold’s recent rally highlights the ongoing demand for safe-haven assets in the face of economic and geopolitical uncertainty. While the U.S. dollar has shown some resilience, its modest gains have not been enough to curb bullish sentiment in gold. With Federal Reserve rate cuts on the horizon and trade tensions persisting, gold remains well-positioned for further upside. As market conditions evolve, financial experts from Fibovest will continue to assess the key drivers influencing gold’s movement and provide insights into potential trading opportunities.
