Gold price is extending its range-play above $2,900 starting a new week on Monday, looking to defend the critical support line near $2,910.
Gold price keeps eyes on Trump’s tariffs, geopolitics
Despite registering a weekly gain last week, Gold price struggles to gain upside traction early Monday. Gold buyers stay cautious amid looming US President Donald Trump’s tariffs on Canada and Mexico after the recent back-and-forth and ahead of this week’s US JOLTS Job Openings and Consumer Price Index (CPI) data.
President Trump issued a fresh tariff threat on Canadian lumber on Friday, noting that it may or may not come today, or on Monday, or on Tuesday. This statement came after the Trump administration temporarily waived tariffs on all USMCA-associated goods and reaffirmed that reciprocal tariffs will take effect in April.
On Sunday, Trump said that they are “looking at a lot of things with respect to tariffs on Russia.
Besides impending tariffs, geopolitical developments will also play a pivotal role this week, especially after the US President said that the administration has discussed lifting an intelligence pause on Ukraine. “Ukraine will sign the minerals deal, but I want them to want peace… they haven’t shown it to the extent they should,” Trump added.
Heightened uncertainty around tariffs and the Ukraine peace deal intensifies concerns over a potential US stagflation, especially after Friday’s February labor market report. The US economy added 151,000 jobs in February, compared with an expected rise of 160,000 and a previous downward revision of 125,000. Meanwhile, the Unemployment Rate climbed to 4.1% versus expectations of 4%. The Labor Force Participation Rate ticked a tad lower to 62.4% in the same period from January’s 62.6%.
The US Dollar lost roughly 3% of its value against its major currency rivals last week amid economic slowdown fears. This lifted bets for more Federal Reserve (Fed) interest rate cuts this year and kept the Gold price downside cushioned. According to LSEG Fed interest rate probabilities, markets are currently pricing 76 basis points (bps) of Fed rate cuts by year-end, starting in June.
However, Gold buyers failed to find any fresh impetus for a sustained upside as Fed Chair Jerome Powell stated on Friday that the US central bank would take a cautious approach to monetary policy easing, adding that the economy currently “continues to be in a good place”.
Looking ahead, Gold price remains a ‘buy-the-dips’ trade as it is the most sought-after store of value and a hedge against inflationary pressures. China continued its Gold purchases for the fourth consecutive month in February, according to the People’s Bank of China data, lending support to yellow metal.
Meanwhile, traders digest the latest China’s inflation data showing that the February CPI fell into negative territory for the first time since January last year, declining by 0.7% year-over-year (YoY.) China’s CPI in February fell 0.2% on a monthly basis, compared to a rise of 0.7% in January.
It’s worth mentioning that Chinese tariffs, announced last week, of up to 15% on a raft of US farm products come into effect on Monday.
Gold price technical analysis: Daily chart
The short-term technical outlook for Gold price remains more or less the same as long as it defends the 21-day Simple Moving Average (SMA) of $2,911 on a daily candlestick closing basis.
The uptrend could gain further traction on acceptance above the $2,930 static resistance.
The Relative Strength Index (RSI) holds comfortably above the 50 level, suggesting buyers will likely retain control in the near term.
If the February 26 high of $2,930 is taken out sustainably, the next topside barriers are at an all-time high of $2,956 and the $2,970 round level.
If Gold price runs into offers, immediate support is seen at the $2,850 psychological barrier as the 21-day SMA at $2,911 gives way.
The demand area near $2,835 could be a tough nut to crack for sellers.
Source: Fxstreet
