Gold prices (XAU/USD) experienced a rollercoaster ride this Tuesday, dipping lower after hitting a record high of $2,942 earlier in the day. The market is reacting to a mix of geopolitical tensions and anticipation surrounding Federal Reserve Chair Jerome Powell’s testimony.
Geopolitical Tensions Impacting Gold Prices
US President Donald Trump recently imposed 25% tariffs on steel and aluminum imports, effective March 12. In response, China has quietly introduced retaliatory tariffs on select US goods. While China has not escalated the situation fully, the ongoing trade tensions are influencing market sentiment.
Fed Powell’s Testimony: A Key Market Driver
Traders are closely watching Fed Chair Jerome Powell’s semiannual testimony to lawmakers on Tuesday and Wednesday. His remarks are expected to provide insights into the future of US monetary policy. Powell is likely to emphasize the resilience of the economy, suggesting no immediate need for further rate cuts.
This stance could pose a bearish risk for gold, as higher interest rates typically reduce the appeal of non-yielding assets like bullion.
Market Movers: Hawkish Bets on Powell
At 15:00 GMT, Powell addressed the US Senate Banking Committee, sparking hawkish bets among traders. President Trump’s recent comments about potential tariff increases have added to the market’s uncertainty.
According to the CME FedWatch tool, there’s a 93.5% chance that interest rates will remain unchanged in March. Meanwhile, billionaire Elon Musk has called for greater scrutiny of the Fed, adding another layer of complexity to the central bank’s role.
Technical Analysis: Profit-Taking Ahead
Gold has gained an impressive 11% this year, making it a favorite trade for the first quarter. However, tail risks are emerging as Powell’s testimony unfolds. A hawkish tone could lead to surging yields, prompting profit-taking in the gold rally.
Key support levels include 2,891(PivotPoint),2,891(PivotPoint),2,871 (S1), and 2,835(S2).Ontheupside,resistancelevelsareat2,835(S2).Ontheupside,resistancelevelsareat2,928 (R1), 2,950(R2),andthepsychological2,950(R2),andthepsychological3,000 mark.
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