Gold price (XAU/USD) continues to trade within a narrow range near its weekly high during the early European session on Wednesday. Investors remain cautious ahead of the US Consumer Price Index (CPI) release, which is expected to influence Federal Reserve (Fed) rate-cut expectations. The outcome of this key economic data will likely shape US Dollar (USD) demand and impact gold prices.
Key Points for Gold Price:
- Gold price remains in a tight trading range as investors await the US CPI data.
- US Dollar attempts to recover from recent lows, limiting gold’s upside potential.
- Market sentiment remains mixed amid economic and geopolitical developments.
- Technical analysis highlights critical resistance at $2,928-$2,930 and support at $2,880.
Market Context: Gold Price Trends and Economic Influences
The gold market is experiencing mixed sentiment as traders adjust their positions before the CPI report. A minor USD recovery from its lowest level since mid-October, coupled with a stable equity market, is capping gold’s upside momentum. However, concerns over US economic challenges and geopolitical uncertainties continue to support gold’s appeal.
Economic Events Impacting Gold Prices
- US Tariff Adjustments: President Donald Trump announced a tariff hike on Canadian steel and aluminum to 50%, boosting safe-haven demand for gold. However, he later reversed the decision following Canada’s move to suspend a 25% electricity surcharge on US exports.
- US Government Funding: The lower house of Congress passed a spending bill to prevent a government shutdown until September, improving market confidence.
- US-Russia Ceasefire Negotiations: Ukraine’s willingness to accept a temporary ceasefire proposal could support global risk sentiment, potentially limiting gold’s gains.
- US Economic Concerns: Trump’s caution regarding a potential recession and signs of labor market cooling continue to fuel expectations of multiple Fed rate cuts this year, which could favor gold prices.
Technical Analysis: Key Levels to Watch
Gold price remains below the critical $2,928-$2,930 resistance level. A confirmed breakout above this zone could trigger a rally toward the all-time high of $2,956 recorded in February. Sustained bullish momentum could pave the way for further gains.
On the downside, immediate support is seen near the $2,900 level, followed by the $2,880 weekly low. A break below these levels may accelerate declines toward $2,860, with further downside potential extending to $2,832-$2,833 and ultimately $2,800 if selling pressure intensifies.
Conclusion: Market Outlook
Gold traders remain cautious as they await the US CPI report, which could significantly impact Fed rate-cut expectations and drive fresh price action. While technical indicators suggest limited downside potential, a decisive move above $2,930 is needed for a bullish breakout. Until then, gold is likely to trade within a range as investors assess economic and geopolitical developments.
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