13 Mar 2025

Gold prices have experienced positive momentum for the third consecutive day, reaching a two-week high. Concerns regarding trade wars, expectations of Federal Reserve interest rate cuts, and a weakening US Dollar continue to enhance the appeal of this precious metal. Traders are now anticipating the upcoming release of the US Producer Price Index (PPI) report for potential short-term trading opportunities.

During the early European session on Thursday, the price of gold (XAU/USD) maintains its upward trend, remaining near the record high achieved on February 24. The tumultuous implementation of trade tariffs by US President Donald Trump and their repercussions on the global economy have consistently driven investors towards safe-haven assets like gold.

Additionally, fears of a US recession, coupled with indications of a softening labor market and declining inflation, suggest that the Federal Reserve may initiate its rate-cutting cycle sooner than previously anticipated. This scenario keeps the US Dollar close to its lowest point since October 16, further contributing to the support for gold, which does not yield interest.

Daily Market Digest: Gold Prices Supported by Trade War Concerns and Weakening USD

The ongoing uncertainty stemming from President Donald Trump's stringent trade tariffs raises fears of a potential economic downturn, prompting investors to seek refuge in traditional safe-haven assets.

On Wednesday, Trump's 25% tariff on all steel and aluminum imports came into effect. Additionally, he warned of retaliatory measures in response to any counteractions from the European Union and Canada.

The European Commission announced on Wednesday that the EU plans to impose tariffs on $28 billion worth of US goods starting next month, while Canada revealed a 25% tariff on over $20 billion of US products.

Furthermore, a cooler inflation report from the US released on Wednesday has increased market expectations for three rate cuts of 25 basis points each by the Federal Reserve during its monetary policy meetings in June, July, and October.

According to a report from the US Bureau of Labor Statistics (BLS), the headline Consumer Price Index (CPI) decreased more than anticipated, falling to a 2.8% year-over-year rate in February from 3% the previous month.

In addition, the core CPI, which excludes the more volatile food and energy sectors, increased by 3.1% year-over-year in the reported month, a deceleration from the 3.3% rise noted in January.

The US Dollar Index, which evaluates the Greenback against a selection of currencies, remains near its lowest point since October 16, contributing to a third consecutive day of rising gold prices on Thursday.

Traders are now anticipating the upcoming US economic data, including the Producer Price Index (PPI), for new insights and short-term trading opportunities during the North American session.

Gold prices may entice dip-buyers near the support level established at the $2,928-2,930 range, which previously served as a resistance point.

From a technical standpoint, the recent sustained movement above the $2,928-2,930 horizontal barrier enhances the likelihood of a challenge to the all-time high near the $2,956 level reached on February 24. The oscillators on the daily chart remain firmly in positive territory and have not yet entered the overbought zone, suggesting that additional buying activity could serve as a new catalyst for bullish momentum. This development would further reinforce the ongoing uptrend that has been evident over the past three months.

Conversely, the $2,930-2,828 resistance level now appears to safeguard the immediate downside. Should prices fall below this threshold, gold could experience a swift decline towards the intermediate support levels of $2,912-2,910, eventually targeting the $2,900 mark. Following this, the weekly low around the $2,800 area comes into play, along with the $2,860 zone, which, if breached decisively, could lead to more significant losses. The XAU/USD pair may then decline towards the late February swing low in the $2,833-2,832 range, ultimately heading towards the $2,800 level.