Gold is experiencing selling pressure as equity markets decline at the start of the week. The current price of Gold (XAU/USD) hovers below $2,900, influenced by comments from President Trump regarding the US economy’s ‘transition’ phase.
The Federal Reserve Chairman, Jerome Powell, indicated there is no immediate need for policy changes ahead of the March 19 meeting. Recent data suggested possible contraction in the economy, with a 97.0% probability of no rate changes anticipated in the meeting, and an 81.8% chance of a rate cut by June 18.
Technical Analysis Of Gold
Technical analysis indicates that Gold could see a pullback if Trump’s tariff comments remain limited, with support around $2,893 and $2,878. Key resistance levels are identified at $2,912, $2,927, and a potential high of $2,945 if buying inflows increase.
Gold serves as a safe haven and hedge against inflation, with central banks becoming major holders, acquiring 1,136 tonnes in 2022, the highest annual total recorded. The price of Gold is affected by factors such as geopolitical instability, interest rates, and movements in the US Dollar, as it tends to rise when the Dollar weakens.
The decline in Gold comes as stock markets struggle, leading investors to adjust their risk exposure. With prices dipping below $2,900, selling appears to be influenced by Trump’s statements about the economy moving through a ‘transition’ phase. Markets often react strongly to uncertainty, and traders are keeping a close watch on how commentary from key figures shapes sentiment.
Powell has made it clear that there is no immediate need for adjustments in monetary policy, which adds some predictability to the situation. However, the probability of a rate cut by mid-year remains high, with markets pricing in an 81.8% chance for June. If economic data continues to show weakness, speculation on rate cuts may intensify, boosting demand for Gold as a hedge.
Gold As A Safe Haven Asset
From a technical standpoint, traders are monitoring support near $2,893 and $2,878. Should selling pressure persist, these levels might be tested in the short term. Resistance remains at $2,912, and a push beyond $2,927 could open the door for a move towards $2,945. Whether Gold can regain momentum will largely depend on how US economic signals evolve and whether any new political developments alter expectations.
Gold continues to be a preferred asset for central banks, with purchases in 2022 reaching the highest levels ever recorded. The metal’s role in preserving value remains a key driver for demand, particularly during periods of economic tension. As such, movements in the Dollar should not be overlooked, as a weaker Dollar often corresponds with stronger Gold prices. Traders who keep an eye on interest rates, geopolitical risks, and broader sentiment shifts will be better positioned to navigate the current environment.
