On Thursday, gold prices fell to their lowest level in two weeks as the dollar strengthened and investors awaited key inflation data for clues on the Federal Reserve's monetary policy. Gold prices fell nearly $13 in the early U.S. trading session, falling below $2,870 an ounce, a daily drop of more than 1.60%, before quickly recovering some of the losses.
The dollar index rose more than 0.5% to 107, further away from its recent 11-week low, making dollar-denominated gold more expensive for holders of other currencies. The yield on the 10-year U.S. Treasury bond rose by more than 1% at one point, weakening the relative appeal of gold, an interest-free asset.
U.S. President Trump's comments on tariff policy further exacerbated market uncertainty. He said on social media that new tariffs on Mexico and Canada will take effect on March 4, and previously proposed a 25% tariff on European cars and other goods.
“Such uncertainty has prompted investors to flock to the U.S. dollar, further pressuring gold, which was already under pressure from profit-taking after hitting all-time highs,” said Lukman Otunuga, senior research analyst at FXTM.
Spot gold hit an all-time high of $2,956.15 an ounce on Monday on safe-haven inflows. However, gold's pullback this week will end its eight-week winning streak, the longest streak since 2020.
Investors are also looking for clues on U.S. monetary policy, with several officials due to speak later and the personal consumption expenditures (PCE) index due on Friday. U.S. bond investors expect the Federal Reserve to shift its focus from inflation to economic growth.
The market expects the Federal Reserve to cut interest rates at least twice this year, and a rate cut of about 55 basis points is expected in 2025. "Any significant changes in these (interest rate) expectations could lead to increased volatility in gold," Otunuga said. "Geopolitical risks and Trump's tariff policy could keep gold bulls active."
From a technical perspective, Fxstreet analysts pointed out that if gold fails to hold the $2,878 area and the $2,860-2,855 area, the price of gold may further accelerate its corrective decline to the $2,834 area and all the way to the $2,800 round mark.
On the other hand, if gold breaks through the immediate barrier of $2,920, it may attract some sellers near the overnight high, which is around $2,930. Moving up, it is possible to move further towards the resistance area of 2,950-2,955 or the record high reached on the first day of this week.
The article is forwarded from: Jinshi Data
