Gold prices (XAU/USD) are showing slight upward movement, consolidating for the third consecutive day this week. The bullion rally has paused after US President Donald Trump exempted goods from Mexico and Canada under the USMCA trade agreement from recently imposed tariffs. Meanwhile, US equity markets continue to trade below their levels on President Trump’s inauguration day, adding to the cautious market sentiment.
Federal Reserve (Fed) official Christopher Waller provided some clarity on interest rates, stating that while he wouldn’t support rate cuts in March, there is room for two or possibly three cuts later this year. This aligns with market expectations, with June being the first key moment for potential rate adjustments.
Key Points for Gold Prices:
- Gold prices consolidate for the third day, with weekly gains still achievable.
- USMCA trade exemptions ease tariff concerns, temporarily stalling Gold’s rally.
- Fed’s Waller hints at potential rate cuts later in 2024, supporting Gold prices.
- Rising US-China tensions and crypto market volatility add to global uncertainty.
- Technical analysis highlights key support and resistance levels for Gold.
Market Context: Geopolitical Tensions and Federal Reserve Rate Cuts
The ongoing tensions between the US and China remain a focal point for global markets. Chinese Foreign Minister Wang Yi recently defended China’s actions on fentanyl flow to the US, accusing President Trump of using the issue to pressure Beijing. Such geopolitical friction often drives investors toward safe-haven assets like Gold.
In the cryptocurrency space, anticipation grew after President Trump signed an order to create a strategic Bitcoin reserve. However, Bitcoin prices plummeted below $90,000 when it became clear that no new tokens would be purchased with taxpayer funds. This volatility underscores the appeal of Gold as a more stable investment option.
XAU/USD Technical Analysis: Critical Levels to Monitor
Gold is currently trading near 2,917, with the daily Pivot Point at 2,917, with the daily Pivot Point at 2,910 and the R1 resistance at 2,928 serving as key levels to watch. If Gold attracts more in flows, the R2 resistance at 2,928 servingas key levels to watch. If Gold attracts more in flows, the R2 resistance at 2,945 could act as a temporary cap before challenging the all-time high of $2,956 reached on February 24.
On the downside, the 2,900 psychological level and the S1 support at 2,900 psychological level and the S1 support at 2,893 form a strong support zone. A break below this area could lead to further declines, with the S2 support at $2,874 providing additional protection.
Expert Opinions: Federal Reserve Rate Cuts Waller on Future
Fed official Christopher Waller emphasized the importance of monitoring inflation and labor market conditions before making any decisions on rate cuts. “If inflation moves back toward the target, you can start lowering rates,” he stated, adding that March might be too early but cuts later in the year are possible. This cautious approach aligns with market expectations, providing a supportive backdrop for Gold prices.
Conclusion: What’s Next for Gold in 2024?
Gold’s current consolidation phase reflects a balanced market, with weekly gains still within reach. While Fed rate cuts and geopolitical tensions provide underlying support, a fresh catalyst may be needed to push Gold to new all-time highs. Traders should keep a close eye on key technical levels and broader market developments for further direction.
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