Gold News: Can Fed Signals and PCE Inflation Data Spark a Gold Breakout?

Gold Prices Rally on Dollar Weakness and Trade Uncertainty

Gold prices advanced significantly last week, approaching the all-time high of $2,790.17 as a combination of a weaker dollar, trade uncertainty, and inflationary concerns supported the metal’s safe-haven appeal. Spot gold rose to $2,770.88, up 2.51% for the week, marking a fourth consecutive weekly gain​​.

How Did Dollar Weakness Boost Gold’s Appeal?

The U.S. dollar index suffered its worst weekly performance in over a year, declining 1.77% to 107.465. U.S. President Donald Trump’s comments on tariffs and his call for lower interest rates at the World Economic Forum in Davos played a significant role in this decline. A softer dollar makes gold more attractive to foreign investors, reinforcing its rally​​.

Are Tariff Worries Driving Safe-Haven Demand?

Trump’s rhetoric on tariffs, including proposed levies on imports from Mexico, Canada, and China, heightened concerns about global trade disruptions. These uncertainties drove investors toward gold as a hedge against economic instability. Expectations of a “friendlier” resolution to trade talks with China provided some relief, but skepticism remains high​​​.

Will Inflation and Treasury Yields Keep Supporting Gold?

Inflationary fears were also evident as analysts noted the potential impact of tariffs on consumer prices. U.S. Treasury yields dipped as markets absorbed Trump’s comments and awaited key economic data, further supporting gold prices. BlackRock CEO Larry Fink warned that rising inflation could challenge equity markets, indirectly benefiting gold​​.

What Role Will the Fed Meeting Play in Gold’s Next Move?

Looking ahead, all eyes are on next week’s Federal Reserve meeting, where no rate changes are expected. However, the Fed’s post-meeting statement and Chair Jerome Powell’s comments will be critical for market sentiment. Key economic data, including fourth-quarter GDP and the Personal Consumption Expenditures (PCE) index, are also on the calendar, potentially adding volatility to gold markets​​.

Will Gold Break $2,790 or Face Resistance?

Gold’s bullish momentum appears intact, supported by dollar weakness, trade policy concerns, and persistent inflationary pressures. While a short-term pullback is possible near the $2,790 resistance level, a decisive breakout could propel prices toward $3,000. Traders should monitor Fed guidance and tariff announcements, which are likely to dictate gold’s next moves. The outlook remains firmly bullish barring unexpected shifts in monetary policy or risk sentiment.

More Information in our Economic Calendar.