Gold News: Bullish Market Holds, But Is a Healthy Correction on the Horizon?

Gold Prices Edge Lower, But Uptrend Remains Intact

Gold prices are trading slightly lower on Tuesday, holding just below yesterday’s record high of $2,956.31. A break above this level could set the stage for a test of the psychological $3,000 mark. Minor support sits at $2,910.32, with a deeper pullback potentially targeting $2,864.33, which could shift momentum to the downside. However, the primary uptrend remains solid, with significant support at the 50-day moving average of $2,755.32.

While the market is well above this average, suggesting vulnerability to a correction, such a move would likely be a healthy pullback rather than a trend reversal. Traders are watching closely for signs of either continued momentum or a potential reset in price levels.

At 11:45 GMT, XAU/USD is trading $2940.40, down $11.66 or -0.39%.

Safe-Haven Flows Dominate on Trade War Jitters

Gold’s allure as a safe haven is being bolstered by escalating trade tensions as U.S. President Donald Trump presses ahead with tariffs on Canadian and Mexican imports. Despite border security enhancements by these countries, Trump confirmed on Monday that tariffs remain “on time and on schedule” ahead of the March 4 deadline.

UBS analyst Giovanni Staunovo noted that this uncertainty is driving a “range trading environment” in precious metals. As Mexico and Canada are significant gold and silver producers, the tariffs could widen the price spread between U.S. and London markets.

Gold’s recent surge past the previous all-time high of $2,790.17 highlights the strong safe-haven demand against the backdrop of global economic and political risks.

Fed Policy in Focus as Inflation Data Looms

Traders are also eyeing the U.S. Federal Reserve’s stance on interest rates. Research from the San Francisco Fed suggests the central bank may respond “strongly and systematically” to inflation and labor market shifts. Higher inflation could lead to sustained high rates, which might weigh on non-yielding assets like gold.

Friday’s U.S. Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge, is expected to offer insights into the central bank’s monetary policy outlook.

Treasury Yields Dip as Investors Brace for Data

U.S. Treasury yields edged lower on Monday, with the 10-year yield at 4.402% and the 2-year at 4.175%, as markets await a heavy slate of economic data. This includes home price indices, mortgage rates, GDP growth figures, and the critical PCE index. Lower yields generally support gold by reducing the opportunity cost of holding the metal.

Market Forecast: Bullish Outlook with Caution

With gold prices near historic highs and safe-haven demand robust, the market maintains a bullish outlook. However, the potential for a pullback looms as prices are stretched above the 50-day moving average. Key resistance at $2,956.31 and support at $2,910.32 will guide short-term trading. If prices breach the minor bottom at $2,864.33, a deeper correction could unfold, but the primary uptrend remains firm barring a significant shift in economic data or Fed policy direction.

More Information in our Economic Calendar.