Gold prices have bounced back from a one-week low, supported by fears of a global trade war and geopolitical tensions. The US dollar remains weak due to expectations of multiple interest rate cuts by the Federal Reserve, which benefits gold as a non-yielding asset.
Currently, gold has risen past the $2,900 mark, amid ongoing concerns regarding US tariffs on steel and aluminium. The anticipated economic slowdown from these tariffs has raised fears of a recession, leading to lower US Treasury yields and further supporting gold prices.
Geopolitical Factors And Market Anxiety
Tensions surrounding Ukraine have escalated, with recent drone attacks on Moscow adding to market anxiety. A meeting between US and Ukrainian officials is set to take place shortly, which could influence gold’s market trajectory.
Upcoming US economic data will be pivotal, with the Consumer Price Index (CPI) and Job Openings and Labor Turnover Survey (JOLTS) set for release this week. These reports will likely impact the US dollar and gold prices moving forward.
From a technical point of view, gold must surpass the $2,922-$2,924 level to maintain upward potential. Conversely, failure to hold above $2,900 could lead to declines towards key support levels around $2,880 and ultimately to $2,800.
Inflation Data And Market Expectations
The CPI, a primary inflation measure, has shown a year-on-year reading of 3%, compared to a previous 3%. This data will influence perceptions of the dollar’s strength and the Federal Reserve’s monetary policy.
Gold prices have rebounded, finding upward momentum after dipping to their lowest point in a week. Worries over global trade restrictions and uncertainty in geopolitics have played a role in this recovery. At the same time, a weaker US dollar has made gold more attractive. The dollar’s softness stems from market expectations that the Federal Reserve will cut interest rates multiple times this year. Since gold doesn’t yield interest, a lower-rate environment makes it more desirable.
At present, prices have moved beyond $2,900, reflecting the market’s reaction to tariff-related concerns. Fresh US levies on steel and aluminium have raised doubts about economic growth, with some worried these measures could tilt the economy towards a downturn. These fears have driven investors towards safe-haven assets while also pushing US Treasury yields lower, a combination that supports gold.
Meanwhile, geopolitical friction remains high, particularly with tensions surrounding Ukraine intensifying. Reports of drone attacks on Moscow have unsettled markets, adding another layer of uncertainty. A planned meeting between US and Ukrainian leadership is expected to take place soon, and whatever emerges from those discussions could have lasting implications.
On the economic side, key data releases are around the corner. This week, inflation figures through the CPI report alongside the latest JOLTS numbers will provide insight into the strength of the US economy. We are closely watching these reports, given their impact on the dollar and, by extension, gold prices. If the data suggests persistent inflation, expectations around monetary policy could shift, influencing the broader direction for both assets.
From a market structure perspective, gold must break through the $2,922-$2,924 range to support further upward movement. If it struggles to maintain levels above $2,900, then we could see a slide towards areas of support near $2,880, with the potential for a deeper pullback to $2,800 if momentum weakens.
The latest CPI data shows inflation holding steady on a year-over-year basis at 3%. This figure will shape how traders assess the dollar’s resilience and the Federal Reserve’s willingness to alter policy. If markets interpret the inflation outlook as stubbornly persistent, pressure could build regarding the central bank’s next steps. That alone could be enough to shift momentum in currencies, bonds, and precious metals alike.
