Gold price bulls is showing a steady consolidative movement during the European session on Tuesday, driven by mixed fundamental factors. The recent strengthening of the US Dollar (USD) has kept the gold market in check, as inflationary concerns rise due to US President Donald Trump’s trade tariff threats. These developments also triggered a moderate recovery in US Treasury bond yields, adding to the USD’s rebound from its monthly low and pressuring gold prices.
Gold Price Trends: A Balancing Act
Despite the USD’s recovery, expectations that the Federal Reserve (Fed) might implement two interest rate cuts by year-end, supported by Trump’s demand for rate reductions, continue to influence the market. These factors counterbalance each other, keeping gold prices stable. Concerns about economic fallout from Trump’s trade policies also limit gold’s downside, as investors remain cautious ahead of the Federal Open Market Committee (FOMC) meeting starting Tuesday.
Trade Policies and Inflation Fears
President Trump has recently threatened new tariffs, including 25% duties on Colombian imports, pharmaceutical products, and raw materials like aluminum and copper. Although some tariffs are currently on hold, the protectionist measures have heightened inflation fears. This fear supports US Treasury yields and the USD while weighing on gold prices. The Fed’s anticipated rate cuts could offset these pressures, keeping the market on edge.
Upcoming Data and Market Focus
Traders are closely watching the US economic data due later Tuesday, including Durable Goods Orders, Consumer Confidence Index, and the Richmond Manufacturing Index. These reports may provide short-term direction for the USD and gold prices. The FOMC policy decision on Wednesday is another critical event that could influence the USD’s performance and gold’s trajectory.
Key Support and Resistance Levels for Gold Price Bulls
Gold prices recently found support at the 23.6% Fibonacci retracement level of the December-January upward movement. Indicators on the daily chart remain in positive territory, hinting at potential bullish momentum. The breakout above the $2,720-$2,725 zone suggests the path of least resistance is upward. However, a decisive break below $2,725 could signal deeper losses toward $2,707-$2,705 or even the 38.2% Fibonacci level around $2,684.
On the upside, gold faces immediate resistance near $2,755-$2,757, followed by $2,772-$2,773 and the all-time high at $2,790. A sustained move beyond $2,800 could ignite a stronger bullish trend, paving the way for further gains.
Conclusion
The gold market remains in a cautious phase amid conflicting fundamental cues. While USD strength and inflation fears weigh on gold prices, expectations of Fed rate cuts and safe-haven demand offer support. Traders are advised to monitor upcoming US economic data and the FOMC meeting for clearer signals.
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