The gold price (XAU/USD) maintains a modest intraday upward trend, trading near the $2,669-$2,670 range during the European session on Tuesday. Despite a gain of over 0.25% for the day, the precious metal lacks strong follow-through momentum. A decline in US Treasury bond yields from their one-year peak, driven by reports of a gradual tariff strategy under the incoming US administration, lends partial support to gold. The retreat in yields also pulls the US Dollar (USD) away from its two-year high, further aiding gold’s modest rise.
Mixed Factors Influence Gold Prices
Several factors are tempering gold price upward movement:
- Investor Sentiment Improves: Reduced fears of disruptive trade tariffs under the new administration have boosted market confidence.
- US Job Data Impact: Friday’s upbeat Nonfarm Payrolls (NFP) report reinforced expectations for a cautious approach to Federal Reserve rate cuts, which supports the USD and bond yields.
With traders hesitant to make aggressive bullish bets, focus shifts to the upcoming US Producer Price Index (PPI) data for further direction.
Risk-On Mood Limits Gold’s Gains
Gold prices remain constrained due to the following:
- Gradual Tariff Strategy: Reports suggest a plan to incrementally increase tariffs, potentially reducing inflation spikes while offering negotiating leverage. This has triggered a minor pullback in Treasury yields and revived gold demand.
- Fed’s Hawkish Stance: Expectations for slower rate cuts keep the USD strong and limit gold’s appeal as a non-yielding asset.
Key Developments to Watch
- Global Geopolitical Updates: Progress in resolving the Ukraine conflict and improved Middle East relations have also influenced market sentiment.
- Upcoming Inflation Data: Key releases, starting with today’s PPI figures and followed by Wednesday’s Consumer Price Index (CPI), are likely to drive market dynamics.
Technical Outlook
From a technical standpoint:
- Upside Potential: A move beyond $2,677 could face resistance near $2,690 and the pivotal $2,700 mark. A sustained rally may target $2,717 and December’s swing high of $2,726.
- Downside Risks: Immediate support lies near $2,657, with a break below Monday’s low potentially accelerating declines toward $2,635 and $2,610.
For additional insights and daily updates on gold market trends, visit our Daily Gold Signal page. To explore in-depth updates, check out our Daily Gold Update section.
