10 Mar 2025

Gold prices are experiencing difficulty in establishing significant momentum as the new week commences. Concerns regarding President Trump's trade policies, along with expectations for interest rate cuts by the Federal Reserve, continue to bolster the commodity. The US Dollar remains weak, hovering near a multi-month low, which further supports the XAU/USD pair.

During the early European session on Monday, gold prices (XAU/USD) maintain a steady position above the $2,900 threshold, continuing their sideways consolidation. Investor anxiety regarding the potential economic repercussions of President Trump's trade tariffs and the possibility of a global trade conflict continues to favor the safe-haven asset. Additionally, the disappointing US jobs report released on Friday has reinforced market speculation that the Federal Reserve will implement multiple interest rate cuts this year, providing further support for the non-yielding yellow metal.

At the same time, the anticipation of additional policy easing from the Federal Reserve keeps the US Dollar depressed, remaining near its lowest level since November, which was reached on Friday. This situation offers further assistance to gold prices. However, despite these supportive elements, the XAU/USD has struggled to draw in significant buyers and remains within a familiar trading range established over the past week. This scenario necessitates caution among aggressive bullish traders before making positions in anticipation of a return to the previously established upward trend, particularly in the absence of significant economic data from the US.

Daily Digest Market Movers: Gold price struggles to lure buyers despite Fed rate cut bets, weaker USD, trade war fears

The ambiguity surrounding the trade policies of US President Donald Trump continues to keep investors apprehensive, serving as a supportive factor for gold prices as the new week commences. Additionally, there are concerns that Trump's protectionist tariffs may hinder economic growth in the United States, potentially prompting the Federal Reserve to reinitiate its cycle of interest rate cuts in June.

Recently, Trump altered his stance on tariffs, indicating that the anticipated tariffs on Canada could be implemented or postponed on either Monday or Tuesday. This announcement follows a decision by the Trump administration to temporarily suspend the 25% tariffs on goods from Canada and Mexico that align with the US–Mexico–Canada Agreement for a duration of one month.

Federal Reserve Chair Jerome Powell remarked on Friday that the uncertainty surrounding the policies of the Trump Administration and their economic implications remains significant. In a separate statement, San Francisco Fed President Mary Daly noted late Sunday that increasing uncertainty among businesses could suppress demand within the US economy, although it does not warrant a modification of the interest rate policy.

Furthermore, the US monthly employment report released on Friday indicated a slowdown in the labor market of the world's largest economy last month, reinforcing expectations for additional policy easing by the Federal Reserve. The Nonfarm Payrolls report revealed that the economy added 151,000 jobs in February, falling short of the consensus forecast of 160,000.

The reading for the previous month has been revised downward to 125,000 from the initially reported figure of 143,000. Furthermore, the report indicated that the Unemployment Rate unexpectedly increased to 4.1% in January, up from 4.0%. This development largely overshadowed the rise in Average Hourly Earnings, which increased to 4% from a revised figure of 3.9% (originally reported as 4.1%).

Market participants are now anticipating approximately three rate cuts of 25 basis points each by the Federal Reserve by the end of the year. This expectation has led to a further decline in US Treasury bond yields, placing the USD bulls in a vulnerable position. Despite these supportive elements, the non-yielding precious metal has faced challenges in attracting significant buyers, prompting caution among bullish investors.

Gold price needs to breakout through a short-term trading range before the next leg of a directional move

From a technical perspective, the Gold price has been showing some resilience below the $2,900 mark. Moreover, oscillators on the daily chart – though they have been losing traction – are still holding in positive territory. That said, the recent repeated failures to make it through the $2,925-2,930 supply zone make it prudent to wait for strong follow-through buying before placing fresh bullish bets. The XAU/USD might then aim to challenge the all-time peak, around the $2,956 region touched on February 24.

On the flip side, acceptance below the $2,900-2,895 horizontal zone might prompt some technical selling and drag the Gold price to the $2,860-2,858 horizontal zone. The downward trajectory could extend further towards the February 28 swing low, around the $2,833-2,832 area, before the XAU/USD eventually drops to the $2,800 round-figure mark.