Gold prices (XAU/USD) are recovering some lost ground after dipping to a one-week low in the previous session. The uncertainty surrounding US President Donald Trump’s tariff plans continues to offer support to the precious metal, traditionally seen as a safe-haven asset amid economic instability.
Despite this recovery, analysts warn that Trump’s proposed tariffs could heighten inflation concerns within the US Federal Reserve (Fed), potentially prompting the central bank to keep interest rates elevated for an extended period. Higher rates tend to diminish the appeal of gold, which does not yield interest, potentially capping the metal’s upside potential.
Later on Wednesday, the US will release its January New Home Sales report, with speeches from Fed officials Raphael Bostic and Thomas Barkin scheduled for the same day. On Friday, markets will focus on the release of the US Personal Consumption Expenditures (PCE) Price Index for January, a key inflation measure.
Gold Gains Amid Trade Tensions and Tariff Concerns
Late Tuesday, President Trump signed an Executive Order directing the US Commerce Department to begin an official probe into copper markets. Earlier, Trump reiterated that tariffs on Canadian and Mexican imports remain on track, despite both countries’ efforts to enhance border security and curb fentanyl trafficking before a March 4 deadline.
US consumer confidence fell sharply in February, declining to 98.3 from 105.3 the previous month, marking the steepest drop since August 2021, according to the Conference Board.
Fed officials continue to signal a cautious stance on monetary policy. Richmond Fed President Thomas Barkin said he would adopt a “wait-and-see” approach until inflation shows a clear return to the Fed’s 2% target. Meanwhile, Dallas Fed President Lorie Logan suggested that, in the medium term, the Fed could consider buying more short-term securities to better align its portfolio with Treasury issuance.
Gold’s Bullish Outlook Remains Despite Short-Term Consolidation
On the day, gold prices are edging higher, although they remain confined within a narrow trading range in the short term. Despite this consolidation, the longer-term bullish outlook for gold remains intact. The metal is holding above the critical 100-day Exponential Moving Average (EMA), and the 14-day Relative Strength Index (RSI) remains above the neutral level at 64, suggesting that upward momentum could persist.
The all-time high of $2,957 presents a formidable resistance level for gold. A breakout above this threshold could trigger a move toward the next bullish targets, including $2,980, the upper boundary of the Bollinger Band, followed by the psychological $3,000 mark.
On the downside, the February 25 low of $2,888 serves as initial support. A deeper pullback could see gold testing $2,795, the lower limit of the Bollinger Band, with further losses potentially bringing the key $2,718 level—near the 100-day EMA—into focus.
