Gold Price Forecast: XAU/USD firms up on geopolitical and tariff uncertainty
- Gold price extends the rebound early Monday and re-focuses on the $2,900 level.
- US Dollar falls as EUR/USD rallies hard on potential Ukraine truce; market mood improves.
- Gold price recovers but remains below 21-day SMA at $2,895 amid the bullish daily RSI.
Gold price is consolidating the rebound from three-week lows of $2,833 early Monday, bracing for an eventful week amid looming US tariffs and the Ukraine truce deal.
Gold price finds demand as US Dollar faces the heat
Asian traders hit their desks with renewed optimism over a likely Ukraine ceasefire proposed by France and the United Kingdom (UK) that overshadows US President Donald Trump’s heated situation with Ukraine’s President Volodymyr Zelensky on Friday at the Oval Office.
On Sunday, European leaders agreed to draft a peace plan on the Ukraine conflict to present to Washington.
The Euro (EUR) rebounds firmly on Europe’s renewed efforts for peace in Ukraine, weighing heavily on the US Dollar (USD) while lifting the USD-denominated Gold price.
Additionally, the Greenback deals a blow as risk sentiment receives a fresh lift from stronger-than-expected February Manufacturing PMI data. China’s Caixin PMI rose to 50.8 in February, compared to January’s 50.1. The reading surpassed the market forecast of 50.3.
The USD also suffers amid an impressive crypto market rebound led by Bitcoin (BTC) after Trump directed the Presidential Working Group on Sunday to move forward on a Crypto Strategic Reserve that will include Bitcoin, Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA).
Broad US Dollar decline helps Gold price recover some ground after two back-to-back days of intense selling last week.
However, the upbeat market mood reduces demand for US government bonds, driving US Treasury bond yields higher while limiting the upside in the non-yielding Gold price.
Looking ahead, Gold price will continue drawing haven demand as US tariffs on Canada, Mexico and China are set to take effect on March 4. Trump’s tariffs could spur market volatility and potential trade retaliation.
Further, reports that Ukraine’s President Volodymyr Zelensky has rejected the calls for a Ukraine-Russia ceasefire could also remain in favor of Gold buyers.
In the meantime, the US ISM Manufacturing PMI and Fedspeak could offer some trading incentives in Gold price.
Gold price technical analysis: Daily chart
The daily chart shows that Gold price bounced off strong support near the $2,835 region once again on Friday, prompting a quick turnaround.
However, the recovery will likely gain traction only on acceptance above the 21-day Simple Moving Average (SMA) at $2,895.
The Relative Strength Index (RSI) is marching higher after defending the 50 level, suggesting that buyers could retain control in the near term.
The February 26 high of $2,930 will be on their radars if the 21-day SMA at $2,895 is taken out sustainably.
The next upside target will be the all-time high at $2,956.
If sellers fight back control, the immediate support is seen at the $2,850 psychological barrier, below which the $2,835 demand area will be retested.
Additional declines will threaten the $2,800 round level.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
