07 Feb 2025

Gold prices are finding it challenging to maintain their intraday gains despite a slight increase in strength. Expectations of a Federal Reserve rate cut, along with low US bond yields, provide support for the XAU/USD pair. Additionally, concerns regarding trade wars are likely to help mitigate any potential declines in the value of the precious metal.

Gold prices (XAU/USD) have relinquished a significant portion of their intraday gains as the European session approaches on Friday, although they remain near the record high achieved earlier this week. The US Dollar (USD) has experienced a slight increase due to repositioning activities in anticipation of the upcoming US Nonfarm Payrolls (NFP) report, which is perceived as a significant factor exerting downward pressure on the commodity.

Nevertheless, apprehensions regarding the intensifying trade tensions between the US and China, along with the economic repercussions of US President Donald Trump’s trade policies, may continue to provide support for the safe-haven appeal of Gold. Additionally, expectations that the Federal Reserve (Fed) will maintain its accommodative stance, coupled with subdued US Treasury bond yields, are likely to help mitigate any potential declines in the price of the non-yielding bullion.

China has implemented tariffs on certain American products in response to President Donald Trump's 10% tax on Chinese imports. This development signifies the onset of a new trade conflict between the two leading global economies and continues to support the demand for safe-haven Gold.

In terms of economic indicators, the US Department of Labor (DoL) disclosed on Thursday that the number of new unemployment insurance applications filed by US citizens increased to 219,000 for the week ending February 1, up from the revised figure of 208,000 from the previous week.

US Treasury Secretary Scott Bessent stated on Thursday that the Trump administration does not have significant concerns regarding the Federal Reserve's interest rate policy, emphasizing instead the importance of reducing 10-year Treasury yields.

Earlier this week, the yield on the benchmark 10-year US government bond dropped to its lowest point since December 12, driven by expectations that the Federal Reserve will implement two rate cuts by the end of 2025, which would further enhance the appeal of the non-yielding yellow metal.

Chicago Fed President Austan Goolsbee remarked that the perception of stagnant inflation is primarily influenced by base effects, cautioning that the central bank must remain vigilant against overheating and economic decline, although overall conditions appear to be favorable.

Gold prices are finding it challenging to maintain their intraday gains despite a slight increase in strength. Expectations of a Federal Reserve rate cut, along with low US bond yields, provide support for the XAU/USD pair. Additionally, concerns regarding trade wars are likely to help mitigate any potential declines in the value of the precious metal.

Entry points are generally situated close to support levels for long positions or near resistance levels for short positions. The objectives for these trades would be the subsequent levels beyond the entry points. For instance, when initiating a long position near a support level, the target would be the next higher resistance level. In contrast, when selling near a resistance level, the target would be the next lower support level.

Support Levels (descending from current price):

2,840.000

2,820.000

... down to 2,720.000

Resistance Levels (ascending from current price):

2,880.000

2,900.000

... up to 2,960.000

A potential entry for a long position could be around 2,840, provided it remains a valid support level, with targets set towards 2,880, 2,900, and so forth. Conversely, an entry for a short position may be considered near the 2,880 resistance, targeting either 2,865.87 (current) or lower support levels.