Gold prices (XAU/USD) are struggling to gain traction, remaining within a trading range. Concerns over US tariffs and their impact on the economy contribute to the safe-haven allure of gold.
The US Dollar has fallen to its lowest level since December 10, influenced by economic growth fears and geopolitical tensions. Meanwhile, expectations that the Federal Reserve will maintain higher interest rates limit gold’s upside potential.
Recent data indicates a drop in the flash S&P Global US Composite PMI to 50.4 in February and a decline in the Consumer Sentiment Index to 64.7, contributing to a cautious outlook on growth and inflation.
Looking ahead, the US Personal Consumption Expenditures (PCE) Price Index release may impact market expectations for Fed rates. Technical indicators show overbought conditions for gold, which may restrict new bullish activity but could encourage buying near $2,920-2,915.
Support levels below this include $2,900 and $2,880, with major concerns arising if prices drop decisively below $2,855. Higher interest rates typically increase opportunity costs associated with gold, as they enhance returns on interest-bearing assets.
Gold has remained stuck in a range, unable to gather momentum in either direction. With worries over trade policies clouding economic forecasts, demand for safe-haven assets has remained in focus. That said, with traders still weighing what the Federal Reserve’s monetary policy stance means for yields and inflation, any major upward movement has struggled to hold.
The US Dollar recently slipped to its weakest level in over two months, pushed down mainly by concerns that growth may not be as resilient as expected. Some of this stems from geopolitical risks, but weak economic indicators have also played a role. Policymakers have not signalled a shift away from higher interest rates, which limits gold’s ability to surge higher. This balancing act continues to keep the metal within its well-defined range.
Recently released reports have not exactly helped ease growth anxieties. The drop in the flash S&P Global US Composite PMI suggests businesses are not seeing the broad-based strength that would warrant an overly optimistic outlook. Similarly, the pullback in consumer sentiment reflects caution, reinforcing concerns that households may curb spending. If these sluggish trends persist, expectations around inflation could shift, which would, in turn, affect the Fed’s future interest rate strategy.
In the coming days, the release of the US Personal Consumption Expenditures (PCE) Price Index could be a key influence. Since it plays a major role in shaping inflation expectations, any surprises in the data may cause adjustments in rate forecasts. If inflation appears sticky, traders may anticipate that interest rates will stay high for longer, which tends to weigh down gold demand. However, if price pressures seem to be easing more than expected, we could see a softer stance emerge, potentially supporting higher gold prices.
From a technical standpoint, indicators suggest the market may be overstretched in the short term, meaning buyers may hesitate to push prices aggressively higher. However, strong buying interest is likely to emerge in the $2,920-2,915 region, where traders could see value. Should prices slip below that, further support lies near $2,900 and $2,880. A decisive break below $2,855 would be more concerning and might indicate a broader shift in sentiment away from gold.
For traders, the current conditions highlight the ongoing push-and-pull between a weaker economic backdrop, rate expectations, and gold’s role as a hedge. With higher interest rates increasing the appeal of yield-bearing assets, gold’s opportunity costs remain a central factor. While sentiment remains cautious, upcoming data releases could be a turning point, forcing adjustments in market positioning.
