Gold Price Forecast: the outlook for gold prices (XAU/USD) suggests potential movement towards fresh record highs as fears surrounding renewed trade tensions resurface.
Gold prices have stabilized after reaching fresh record highs of $2,956 during Tuesday’s Asian trading hours. As buyers take a moment to regroup, the market is influenced by renewed concerns over trade wars, spurred by recent discussions from US President Donald Trump and his administration.
The risk sentiment in the market remains weak as of Tuesday, primarily due to the re-emergence of tariff discussions led by Trump. This uncertainty is dampening investor confidence, especially with the upcoming earnings report from Nvidia, a leader in artificial intelligence (AI), expected to influence market behavior.
Broad risk aversion is allowing the safe-haven US Dollar (USD) to maintain its recent gains, which is capping any upward movement in gold prices. However, the recent decline in US Treasury bond yields and escalating trade war concerns seem to limit the downside for gold.
US Treasury bond yields have continued their bearish trend, supported by a successful auction of two-year government bonds on Monday. Additionally, the recent release of US S&P Global business PMI data has raised alarms about the economy's health, increasing the likelihood of two interest rate cuts by the Federal Reserve this year.
The dovish sentiment surrounding the Fed's future actions has put downward pressure on US Treasury yields, indirectly supporting gold prices as they build on their upward momentum.
The persistent threat of a trade war is bolstering gold's appeal as a traditional store of value. On Monday, Trump confirmed that sweeping tariffs on imports from Canada and Mexico will proceed once the month-long delay expires next week. Furthermore, reports indicate that the Trump administration is considering tightening chip controls on China, with potential restrictions on Nvidia chip exports to the country.
Additionally, the lack of substantial progress in the second round of US-Russia peace talks regarding the Ukraine conflict is further supporting gold prices.
In the near term, gold prices will likely be influenced by Trump’s tariff discussions, while mid-tier US Consumer Confidence data may play a secondary role. Market participants should also be prepared for potential profit-taking ahead of Nvidia's earnings report.
Technical Analysis: Daily Chart Insights
Source: tradingview
As of March 3, 2025, a technical analysis of the gold price (XAU/USD) on the daily chart reveals key insights into its current trajectory. Gold recently hit an all-time high of $2,956 earlier this week but has since pulled back, trading around $2,860, reflecting a nearly 3% decline. This correction follows a strong eight-week bullish run, suggesting a shift in momentum.
The daily chart shows gold testing the 23.6% Fibonacci retracement level at approximately $2,868, calculated from the October 2023 low of $2,583 to the recent peak. Support is evident near $2,835 (S2 pivot) and the psychological $2,800 level, where buyers may step in. Resistance lies at the $2,888 pivot, with a break above $2,900 signaling potential recovery toward $2,941 (R2).
What Are Tariffs?
Tariffs are customs duties imposed on certain imports or categories of products designed to protect local industries by making foreign goods more expensive.
Differences Between Taxes and Tariffs
While both involve financial charges, taxes are levied on income or transactions, whereas tariffs specifically target imported goods.
Are Tariffs Beneficial?
The impact of tariffs can be both positive and negative, depending on their implementation and the sectors affected.
Trump’s Tariff Plan
Trump has indicated a willingness to move forward with tariffs on various imports, which could have significant implications for trade dynamics.
As gold prices stabilize after reaching record highs, the market remains sensitive to developments in trade policy and economic indicators. The interplay of renewed trade war fears and ongoing economic uncertainties will continue to shape the outlook for gold in the coming days. Investors should remain vigilant as they navigate this complex landscape, balancing potential risks and opportunities in the gold market.
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
