Gold price forecast remains confined within a narrow trading range near its all-time high during the European session on Friday. The precious metal appears set for a strong second consecutive weekly gain. Investors are cautious due to concerns over the economic fallout of US President Donald Trump’s aggressive trade policies. Additionally, growing expectations that the Federal Reserve (Fed) will implement multiple interest rate cuts in 2025 provide support for gold, a non-yielding asset.
Key Highlights:
- Gold price forecast consolidates near record highs amid uncertain market cues.
- Concerns over US trade policies and potential Fed rate cuts support gold.
- A stronger US Dollar limits further upside momentum.
- Market sentiment remains cautiously optimistic due to political developments.
Market Context and Analysis
The XAU/USD bulls hesitate to initiate fresh bets amid a positive risk sentiment, which is strengthened by constructive US-Canada trade discussions and reports indicating enough Democratic support to prevent a US government shutdown. Meanwhile, a continued recovery in the US Dollar (USD) from its recent multi-month low is capping gold’s upward movement. Despite this, underlying fundamentals suggest that the path of least resistance for gold remains upward.
Daily Digest Market Movers: Gold Price Consolidates Before the Next Move
Trade War Concerns and Market Reactions
- US President Donald Trump intensifies the tariff war by threatening a 200% duty on European wine and cognac unless the EU removes surcharges on US whiskey.
- Additional 25% tariffs on steel and aluminum imports, effective this week, have heightened fears of an escalating trade conflict.
- These developments have pushed gold prices higher as investors seek safe-haven assets.
Federal Reserve Rate Cut Expectations
- Market participants increase bets on the Fed implementing rate cuts amid recession fears.
- Softer-than-expected US inflation data reinforces expectations of policy easing.
- The US Consumer Price Index (CPI) rose by 2.8% YoY in February, down from 3% in January.
- Core inflation eased to 3.1% YoY from 3.3% in the previous month.
- The Producer Price Index (PPI) remained unchanged, indicating weaker inflationary pressures.
- Traders are now pricing in three 25 basis-point rate cuts in June, July, and October, further bolstering gold’s appeal.
Geopolitical Developments and Market Sentiment
- A slight improvement in global risk sentiment follows optimistic statements from the White House and Canadian officials.
- Ontario Premier Doug Ford noted progress in trade discussions with US Commerce Secretary Howard Lutnick.
- Russian President Vladimir Putin tentatively supports a 30-day ceasefire proposal in Ukraine, boosting investor confidence.
- Reports suggest sufficient Democratic votes to prevent a US government shutdown, providing additional market stability.
- The US Dollar Index (DXY) extends its recovery for the third consecutive session, limiting gold’s immediate upside potential.
Technical Analysis: Gold Price Consolidates in Overbought Territory
From a technical perspective, this week’s breakout above the $2,928-$2,930 resistance and the move beyond the prior record high of around $2,956 serve as bullish signals. However, the Relative Strength Index (RSI) on the daily chart remains near the overbought threshold, suggesting the possibility of near-term consolidation or a slight pullback before the next leg higher.
Key Technical Levels to Watch
- Immediate Support: $2,956 region
- Next Support: $2,930-$2,928 breakout point (previous resistance now acting as support)
- Potential Downside: A break below $2,928 could trigger technical selling, pushing prices toward $2,900 and possibly $2,880 (weekly low).
- Upside Potential: A sustained move above $2,956 could drive gold toward fresh record highs in the coming sessions.
Market Outlook and Conclusion
Gold prices remain well-supported by economic uncertainty, central bank policies, and geopolitical developments. While a stronger US Dollar temporarily limits the upside, ongoing expectations of Fed rate cuts and concerns over trade tensions continue to favor gold bulls. Traders should monitor upcoming US Consumer Sentiment and Inflation Expectations data for short-term opportunities, with a key focus on the upcoming two-day FOMC monetary policy meeting starting next Tuesday.
For more insights on gold price movements, visit Daily Gold Signal. For daily gold market updates, check Daily Gold Update.
