11 Mar 2025

• Gold price rebounds from a one-week low and draws support from a combination of factors.
• Global trade war fears and geopolitical risks continue to underpin the safe-haven commodity.
• Fed rate cut bets keep the USD depressed and further benefit the non-yielding XAU/USD pair.
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• Gold prices (XAU/USD) have reached a new daily high during the early European trading session and are poised to extend their upward momentum beyond the $2,900 threshold. Ongoing concerns regarding the potential economic repercussions of trade tariffs imposed by US President Donald Trump, along with geopolitical uncertainties, are significant factors that continue to support the demand for this safe-haven asset. Additionally, the prevailing risk-averse sentiment and ongoing selling pressure on the US Dollar (USD) further enhance the appeal of the precious metal.
  
  Market participants appear increasingly convinced that a slowdown in US economic growth, driven by tariffs, may compel the Federal Reserve (Fed) to implement multiple interest rate cuts this year. This scenario keeps US Treasury bond yields low and the USD near its lowest point since November, providing further support to the non-yielding Gold price. However, it remains uncertain whether the XAU/USD pair can sustain its upward trajectory, as traders may be hesitant to make significant moves ahead of the upcoming US inflation data this week.

Daily Digest Market Movers: Gold price bulls aim to reclaim dominance amid risk-averse sentiment and dovish Fed-induced USD weakness

Investors are increasingly seeking safety in traditional assets as concerns mount over US President Donald Trump's trade tariffs, which have contributed to a rebound in gold prices from a one-week low reached on Monday. Notably, Trump's 25% tariffs on global steel and aluminum imports are set to take effect on Wednesday, with additional tariffs anticipated to be implemented on April 2.

Market sentiment remains cautious regarding a potential recession in the US, driven by Trump's protectionist measures. Compounding this uncertainty, indications of a weakening labor market have led to speculation that the Federal Reserve may resume its cycle of rate cuts in June. This environment has kept US Treasury bond yields low and the US Dollar near a multi-month low, thereby providing further support to the non-yielding gold asset.

The recent meeting between Ukrainian President Volodymyr Zelenskiy and Trump at the Oval Office on February 28 ended unfavorably, resulting in the suspension of all US military aid to Ukraine. Consequently, investors are preparing for further geopolitical developments as US officials engage with their Ukrainian counterparts starting today, which could significantly impact the price dynamics of the XAU/USD pair.

In the hours leading up to the US-Ukraine Summit focused on minerals and peace negotiations, Ukraine executed unprecedented drone strikes on Moscow. According to Moscow Mayor Sergei Sobyanin, Russian air defense systems intercepted at least 11 Ukrainian drones targeting the Ramenskoye and Domodedovo districts, located approximately 40 to 50 kilometers south and southeast of the Kremlin.

Later in the North American trading session, market participants will look for insights from the Job Openings and Labor Turnover Survey (JOLTS) released by the US. However, the primary focus will remain on upcoming US inflation data, with the Consumer Price Index (CPI) scheduled for release on Wednesday and the Producer Price Index (PPI) on Thursday. These figures are expected to influence the USD and market direction.

Gold prices are expected to attract new sellers at elevated levels and may encounter difficulties in surpassing the horizontal resistance between $2,922 and $2,924.

From a technical standpoint, the recent decline and closure below the $2,900 mark, which represents the lower boundary of a short-term trading range, may serve as a significant catalyst for bearish traders. However, the presence of mixed oscillators on the daily chart suggests that it would be wise to await additional selling momentum below the $2,880 level, or the one-week low, before committing to further short positions. A subsequent decline could potentially pull the Gold price down to the intermediate support level of $2,860, on the way to the swing low from late February, situated around $2,833 to $2,832, and ultimately towards the $2,800 threshold.

Conversely, any upward movement beyond the $2,900 level is likely to encounter resistance near the $2,922 to $2,924 range. A sustained breakthrough past this barrier could propel the Gold price above the $2,934 resistance, potentially leading to a retest of the record high around the $2,956 level reached on February 24.