Gold (XAU/USD) surged on Tuesday, climbing over 1% to trade at $2,917, as escalating trade tensions drove investors toward the safe-haven asset. Despite strong U.S. jobs data, traders continued piling into bullion, with economic slowdown concerns weighing on U.S. Treasury yields and the dollar, further supporting gold prices.
Market Drivers
Sentiment improved as Canada and the U.S. eased tariff threats, but uncertainty remains as former President Donald Trump’s aluminum and steel tariffs take effect on Wednesday. Meanwhile, U.S. job openings rose in February, signaling labor market strength.
A potential geopolitical shift emerged as Saudi Arabia announced that Ukraine is open to a ceasefire, with U.S. Secretary of State Marco Rubio stating that negotiations now hinge on the U.S. persuading Russia. A de-escalation of the conflict could dampen gold’s appeal, which tends to rise in times of geopolitical instability.
Key Economic Indicators
The U.S. 10-year Treasury yield climbed six basis points to 4.282%, while real yields on inflation-protected securities (TIPS) also rose, creating headwinds for gold.
The Atlanta Fed GDP Now model projects a Q1 2025 contraction of -2.4%, the first negative print since the COVID-19 pandemic.
The People’s Bank of China (PBoC) continued its gold-buying spree, increasing reserves by 10 tonnes in early 2025. The National Bank of Poland (NBP) was the largest buyer, adding 29 tonnes to its holdings.
Money markets now anticipate 77.5 basis points of Fed rate cuts in 2025, up from 74 bps last week.
Technical Outlook
Gold remains in an uptrend, with buyers eyeing a breakout above last week’s high of $2,930. A breach could push prices toward the record high of $2,954 and the key psychological level of $3,000.
On the downside, support lies at $2,900, followed by $2,850 and the February 28 low of $2,832. A further drop could bring $2,800 into focus.
Traders now await Wednesday’s U.S. Consumer Price Index (CPI) data, followed by the Producer Price Index (PPI) release on Thursday, for further market direction.
