Gold price forecast (XAU/USD) is steadily climbing towards new record highs, following softer-than-expected US Consumer Price Index (CPI) data released on Wednesday. This data eased concerns about recession and stagflation, leading to a shift in market sentiment. Investors moved out of US bonds and into equities, causing bond yields to rise. As of Thursday, gold is trading around $2,950, reflecting bullish momentum.
Key Highlights for Gold Price:
- US CPI Data Impact: February’s CPI figures showed the slowest increase in four months, raising hopes for an interest rate cut by the Federal Reserve.
- Geopolitical Uncertainty: US President Donald Trump announced reciprocal tariffs on European imports, set to take effect on April 2.
- Market Sentiment: Traders are monitoring US diplomatic efforts in Russia regarding a potential ceasefire deal backed by Ukraine and US military aid.
- Gold Price Projections: Analysts forecast gold prices to exceed $3,100 in Q2 2025, with potential highs of $3,500 due to inflation concerns.
Market Trends and Influences
US CPI Data: A Temporary Relief
February’s CPI report provided temporary relief as inflation slowed, reinforcing expectations of an interest rate cut. According to Bloomberg, traders are now fully pricing in a 25-basis-point reduction in the Fed’s June meeting. Lower interest rates generally support gold prices since the metal does not yield interest.
Trump’s Tariff Policy and Economic Implications
On Wednesday, Trump declared that the US would impose reciprocal tariffs on European imports. This move increases economic uncertainty and could drive further demand for safe-haven assets like gold. At the same time, US diplomatic efforts are underway in Russia, aiming to negotiate a ceasefire deal supported by Ukraine and US military backing.
Expert Predictions on Gold’s Trajectory
- BNP Paribas SA: Gold may surpass $3,100 in Q2 2025 due to economic instability resulting from US trade policies.
- Macquarie Bank: A worsening US budget outlook signals rising inflation, potentially pushing gold to $3,500 by Q3 2025.
- CME FedWatch Tool: There is a 97.0% probability that the Federal Reserve will maintain interest rates in the upcoming March 19 meeting, with a 39.5% chance of a cut in May.
Technical Analysis: Gold’s Next Moves
Resistance and Support Levels
Gold is approaching the intraday R1 resistance at $2,947 as of Thursday. Despite rising US yields, gold remains strong due to shifting investor sentiment.
- Upside Targets:
- Break above $2,947: The next target is R2 resistance at $2,961.
- All-time high: A move beyond $2,956 could lead to new record levels.
- Downside Risks:
- Daily Pivot Point: $2,927 serves as immediate support.
- Further Support Levels: If prices fall, watch S1 support at $2,913 and S2 at $2,892.
Conclusion
Gold prices continue to trend higher, driven by geopolitical risks, inflation concerns, and shifting monetary policies. The market remains focused on US-EU trade tensions, potential Fed rate cuts, and ongoing global economic uncertainties. Traders should closely monitor key technical levels and upcoming policy announcements to navigate gold’s next moves.
