Gold price sits near record high, continues to draw support from the global flight to safety
17 Mar 2025
Gold prices remain near their historical peak, driven by increasing trade tensions that bolster safe-haven demand.
Anticipations of multiple interest rate cuts by the Federal Reserve in 2025 further support the XAU/USD.
The US Dollar is hovering close to a multi-month low, providing additional backing for the commodity as the Fed's decisions approach.
On Monday, the price of gold (XAU/USD) finds it challenging to attract significant buyers, yet it stays near its all-time high, surpassing the psychological threshold of $3,000 reached on Friday. Amid rising concerns regarding escalating trade tensions and a potential global trade war, geopolitical uncertainties continue to favor the safe-haven appeal of gold. Additionally, expectations for further interest rate reductions by the Federal Reserve enhance the demand for this non-yielding asset.
At the same time, the outlook for additional policy easing from the US central bank keeps the US Dollar subdued near a multi-month low established last week, which in turn supports gold prices. However, a generally optimistic sentiment in Asian equity markets, fueled by positive news regarding China's stimulus measures announced over the weekend, limits the potential gains for XAU/USD. Furthermore, traders appear cautious ahead of the two-day FOMC policy meeting commencing on Tuesday.
Daily Digest Market Movers: Gold price bulls retain control amid trade jitters, geopolitical risks and dovish Fed expectations
US Treasury Secretary Scott Bessent expressed on Sunday that he remains unconcerned about the recent declines in the market, asserting that such corrections are both healthy and typical. Regarding the possibility of a recession, Bessent noted that there are no certainties. This uncertainty, coupled with concerns over the potential economic repercussions of President Donald Trump's trade tariffs, continues to support the demand for safe-haven assets like gold.
On the geopolitical front, Houthi leader Abdul Malik al-Houthi declared on Sunday that his forces would target US vessels in the Red Sea as long as the US persists in its military actions against Yemen, following recent deadly airstrikes. In response, the US Secretary of Defense stated that the US will maintain its military operations against the Houthis until they cease their attacks on shipping, heightening the risk of further conflict escalation in the region.
In another development, an Israeli drone strike in northern Gaza resulted in the deaths of at least nine individuals, including three journalists, on Saturday. The Israeli military reported that its forces have intervened to counter threats posed by terrorists approaching its troops or attempting to plant explosives since the ceasefire took effect on January 19. The military further indicated that six of the deceased were identified as members of Hamas's armed factions.
Market participants are factoring in the likelihood that the Federal Reserve may reduce interest rates multiple times this year due to concerns about an economic slowdown stemming from the Trump administration's assertive trade policies. This sentiment follows the release of softer US inflation data last week and indications of a cooling labor market, which bolster expectations for additional policy easing by the central bank.
Indeed, futures for Fed funds indicate that the Federal Reserve could lower borrowing costs by 25 basis points at the monetary policy meetings scheduled for June, July, and October. These expectations were reinforced by the University of Michigan Surveys released on Friday, which revealed that the Consumer Sentiment Index fell to its lowest level in nearly two and a half years in March. This situation continues to place pressure on the US Dollar bulls.
Gold price needs to consolidate before the next leg up; downside potential seems limited amid a bullish technical setup
Today’s Range Analysis
Support Levels:
Immediate Support: 2,985.185 (recent low)
Strong Support: 2,900.000 (psychological level)
Resistance Levels:
Immediate Resistance: 2,990.770 (recent high)
Strong Resistance: 3,000.000 (major psychological level)
Daily Range Estimate:
If the price holds above 2,985.185, the range could be 2,985.185 - 3,000.000.
If the price breaks below 2,985.185, the range could extend to 2,900.000 - 2,990.770.
Trading Strategy
Bullish Scenario:
Entry: Near 2,985.185 (support).
Target: 2,990.770 - 3,000.000 (resistance).
Stop-Loss: Below 2,980.000.
Bearish Scenario:
Entry: Near 2,990.770 - 3,000.000 (resistance).
Target: 2,985.185 - 2,900.000 (support).
Stop-Loss: Above 3,000.000.
