- Lower-than-expected US inflation figures offset the calming of fears of a continued Russia-Ukraine war.
- As the US dollar retreated following the results of US economic data, gold bulls found an opportunity to move towards the resistance level of $2,940 per ounce.
- The session low was $2,905, and spot gold prices are currently stabilizing around $2,932 per ounce.
- According to gold trading platforms, demand for gold bullion increased with the decline of the US dollar after a report showed that US consumer prices rose less than expected last month.
- Furthermore, Safe haven buying continues amid the US imposition of new tariffs on aluminium and steel.
US Inflation Figures and Their Impact on the Gold Market
Historically, gold has long been considered a hedge against inflation. As inflation rises, gold prices tend to follow suit. Meanwhile, this pattern persists over the long term, it behaves unpredictably in the short term. In 2024, with inflation rates rapidly declining in the West, gold bucked this trend, accelerating rather than slowing as expected. The gold bullion market is known to have a strong inverse relationship with the performance of the US dollar; when the dollar rises, gold typically weakens. But in 2024, both the US dollar and gold rose simultaneously—an unusual combination that defies historical norms. Also, gold has a strong inverse relationship with US Treasury yields, as investors choose bonds with yields over gold when yields rise. However, in 2024, gold and bond yields are moving in tandem, suggesting that traditional relationships are being ignored.
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Yesterday, according to the Economic Calendar data, the US Bureau of Labor Statistics announced the US Consumer Price Index for February, which showed inflation slowing to an annual rate of 2.8% last month, down from 3.0% in January and below expectations of a 2.9% increase. The US core CPI, which excludes volatile food and energy prices, rose 3.1%, down from 3.3% the previous month and below consensus expectations of a 3.2% increase.
Overall, the decline shows that the US has yet to feel any inflationary impact from US President Donald Trump's tariff policies. A 25% tariff on steel and aluminium imports took effect today. Similar tariffs will be applied to goods imported from Canada and Mexico on April 2 if Trump does not reverse his decision. Saxo Bank noted that "gold... continues to attract safe-haven demand amid Trump's erratic tariff plans, recession fears, and recent US dollar weakness."
US Tariffs Boost Gold Gains
According to recent gold market trading, gold prices have maintained their gains, supported by their safe-haven appeal and a weak US dollar. US President Donald Trump backed down from his threat of a trade war with Ontario, hours after pledging to double tariffs on Canadian steel and aluminium to 50%, while Ontario Premier Doug Ford temporarily suspended an additional 25% tariff on US electricity exports. Overall, ongoing global trade uncertainty, coupled with growing concerns about a recession caused by US tariffs, continued to push investors toward safe-haven assets.
However, geopolitical risk premiums retreated after the US agreed to resume military aid and intelligence sharing with Ukraine following Kyiv's acceptance of a US-proposed 30-day ceasefire with Russia.
Trading Tips:
The gold market is anticipating a breakout of the $3,000 psychological resistance, which could happen if the current gains continue.
Gold Price Technical Analysis and Expectations Today:
There is no change in my technical view, and according to gold analysts' forecasts as well, the general trend for gold prices remains upward, and the psychological resistance of $3000 per ounce will remain a legitimate target for bulls if they technically move towards the resistance levels of $2955 and $2975 per ounce first. In contrast, and on the same time frame, the support of $2885 will remain the first station to break the trend. So far, we still prefer buying gold from every downward level, but without risk and avoiding buying from historical record peaks.
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