Key Points:
- Gold fell 0.5% to $2,937.03 after reaching an all-time high of $2,956.15 on Monday.
- Profit-taking weighs on prices, but safe-haven demand remains strong amid global trade concerns.
- Traders await Friday’s U.S. PCE inflation data, the Fed’s preferred inflation gauge, for rate cut signals.
Gold prices declined on Tuesday, pulling back 0.5% to $2,937.03 per ounce, as traders booked profits following Monday’s record-breaking surge to $2,956.15. The rally was fueled by safe-haven demand, with market participants rushing to gold amid concerns that President Donald Trump’s tariff policies could stoke inflation and intensify a global trade war.
U.S. gold futures also edged lower by 0.4%, trading at $2,952 in early sessions. Despite the decline, market sentiment remains cautious, as upcoming economic data and geopolitical risks continue to support bullion’s long-term outlook.
Trump’s Tariff Plans Keep Markets on Edge
Market volatility remains elevated as Trump reaffirmed his commitment to imposing tariffs on Canada and Mexico by March 4, despite diplomatic efforts to strengthen border controls and curb fentanyl smuggling.
This could add to global trade tensions, possibly driving inflation higher and increasing demand for gold as a safe haven. With the deadline approaching, traders are keeping a close eye on Washington’s next moves, which could spark fresh gold buying if economic uncertainty grows.
Federal Reserve’s Policy Outlook in Focus
Adding to the uncertainty, research from the San Francisco Fed indicates that both traders and economists expect the Federal Reserve to take a strong and systematic approach to inflation and labor market shifts.
This week, several Fed policymakers are expected to deliver hawkish remarks, reinforcing expectations that interest rates will remain high for longer. While markets have already priced in a prolonged rate hold over the next two meetings, any deviation from this outlook could impact gold’s momentum.
Traders are now focused on Friday’s release of the Personal Consumption Expenditures (PCE) report, the Fed’s preferred measure of inflation. A higher-than-expected reading could delay rate cut expectations, putting short-term pressure on gold. However, if the data suggests inflation is easing, it could reinforce expectations for rate cuts later this year, supporting gold’s longer-term upside.
India’s Gold Imports Collapse Amid Record Prices
On the demand side, India’s gold imports are set to plummet by 85% in February, marking their lowest level in two decades. High domestic bullion prices have weakened consumer demand, limiting purchases in one of the world’s largest gold-consuming markets.
Despite this drop, global safe-haven demand continues to dominate price action, with traders closely monitoring tariff risks, central bank policies, and inflation trends as key market drivers.
Technical Outlook
Gold is currently trading within a critical range, with support at $2,920 and resistance between $2,950 and $2,956. A break below $2,920 could signal further downside, potentially leading to increased selling pressure as traders look for lower support levels.
Picture: Gold holds above $2,920 support, eyeing $2,950 resistance on the VT Markets app
Conversely, a retest of Monday’s high near $2,956 could spark renewed bullish momentum, drawing in buyers anticipating another leg higher. This resistance zone will be crucial in determining whether gold can sustain its long-term uptrend or faces a deeper pullback.
Despite recent fluctuations, gold’s broader outlook remains bullish, driven by safe-haven demand and central bank accumulation. However, short-term pullbacks are expected, as traders adjust positions amid shifting market conditions. Economic data, Federal Reserve policy expectations, and diplomatic developments will play a key role in determining gold’s next move. If price holds above support and gains traction near resistance, it could signal a continuation of the long-term uptrend, while a breakdown below $2,920 may lead to deeper corrections before another bullish attempt.
With trade and inflation concerns mounting, gold’s trajectory will hinge on upcoming economic data and Fed signals, with traders closely watching whether gold can break past the $3,000 milestone in the coming months.
