Gold Prices Decline as US Dollar Strengthens Amid Market Volatility
Gold prices are struggling as the [US Dollar](w) (USD) continues to strengthen, driven by rising risk-off sentiment extending into Asian markets this Friday. Investors are reacting to fresh tariff threats from [Donald Trump](w) and a sharp decline in [Nvidia](w), a major force in [artificial intelligence](w) (AI). These factors have heightened uncertainty, keeping pressure on gold.
On Thursday, Trump confirmed that his proposed 25% tariffs on Mexican and Canadian goods will take effect on March 4, alongside an additional 10% duty on Chinese imports. This stance contradicts his earlier remarks suggesting the tariffs might take effect on April 2. The shift in trade policy has further unsettled financial markets, fueling a cautious tone among investors.
Market sentiment remains fragile amid growing concerns about the US economy. Nvidia’s disappointing earnings triggered a selloff in the “[Magnificent Seven](w)” [mega-cap stocks](w) on [Wall Street](w), amplifying investor unease. Meanwhile, economic data showed that Q4 2024 [US GDP](w) growth held steady at an annualized 2.3%, but jobless claims surged by 22,000 to 242,000—the highest level in three months. This increase in unemployment filings signals potential cracks in the labor market.
Against this backdrop, the [Greenback](w) continues to dominate, maintaining downside pressure on the USD-denominated [gold](w) market. However, expectations of a more dovish [Federal Reserve](w) (Fed) due to weakening economic data, coupled with increased safe-haven demand for [US government bonds](w), could provide some support for gold prices.
Adding to this dynamic, the benchmark [10-year US Treasury bond](w) yield remains in a downward trajectory, hovering near an 11-week low at 4.20%. This ongoing decline in yields may limit the US Dollar’s upside, potentially slowing gold’s losses.
Looking ahead, the Fed’s preferred inflation gauge—the [core Personal Consumption Expenditures (PCE) Price Index](w)—will be a crucial catalyst for gold’s next move. Forecasts indicate a 2.6% rise in January, down from December’s 2.8%. Any significant deviation from expectations could influence Fed rate cut bets, impacting both the US Dollar and gold prices.
Gold price technical analysis: Daily chart
From a technical perspective, gold remains under pressure after closing Thursday below the critical short-term support of the 21-day [Simple Moving Average](w) (SMA) at $2,890. This reinforces the bearish outlook. However, the 14-day [Relative Strength Index](w) (RSI) remains above 53.50, indicating that buyers are still active.
If sellers gain control, immediate support lies at the February 12 low of $2,864, with the psychological barrier of $2,850 as the next key level. A further decline could test the February 6 low of $2,834.
On the other hand, if gold manages a weekly close above the 21-day SMA resistance at $2,890, renewed bullish momentum could push prices toward the February 26 high of $2,930. Beyond that, buyers will set their sights on the all-time high of $2,956.
As the week draws to a close, month-end capital flows and any additional remarks from Trump could introduce more volatility, shaping gold’s short-term trajectory.