Gold (XAU/USD) dipped below $3,300 during Friday’s Asian session, pressured by a modest recovery in the U.S. dollar. The greenback’s strength, driven by cautious sentiment ahead of the Personal Consumption Expenditures (PCE) Price Index release, weighed on demand for non-yielding assets like gold. However, safe-haven buying helped limit deeper losses, supported by global uncertainties.
Geopolitical and Trade Risks Support Gold’s Haven Appeal
Renewed volatility in trade policy added to market tension after a U.S. federal appeals court reinstated tariffs imposed under former President Donald Trump. The decision overturned a trade court ruling that had temporarily blocked the measures, reintroducing uncertainty and fueling demand for gold.
Geopolitical risks also remained elevated. Kremlin spokesperson Dmitry Peskov confirmed Ukraine had responded to Russia’s proposal for renewed peace talks in Istanbul. Meanwhile, the White House announced a tentative ceasefire proposal between Israel and Hamas, though acceptance of the deal remained unclear.
Inflation Data Key to Fed Outlook and Gold Trajectory
Market attention remains fixed on the upcoming release of the PCE Price Index, the Federal Reserve’s preferred inflation measure. A softer-than-expected reading could boost expectations for interest rate cuts later this year, potentially weakening the dollar and lifting gold.
Conversely, higher inflation could reinforce a more hawkish policy stance, strengthening the dollar and capping further gains in gold. Recent comments from Federal Reserve officials signal cautious optimism, with multiple policymakers suggesting the possibility of rate cuts—if inflation continues to moderate and labor markets remain resilient.
Fed Chair Jerome Powell reiterated that monetary policy decisions will remain data-dependent, underscoring the importance of Friday’s inflation report.
Technical Analysis: Gold Balances at Crucial Support
Gold is trading around $3,291, caught between converging trendlines forming a descending triangle on the 2-hour chart. Immediate support lies near $3,286, while resistance is capped at $3,325. The 50-period EMA at $3,292 and the 200-period EMA at $3,288 are reinforcing the current congestion zone.
A decisive break below $3,286 could trigger a drop toward $3,247, while a breakout above $3,325 may fuel a rally toward $3,366. The pattern reflects growing indecision, with traders urged to await a clear move outside the range before committing to positions.
Silver Outlook: Narrowing Range Suggests Imminent Break
Silver (XAG/USD) held near $33.05, supported by rising geopolitical tensions and consolidation patterns. On the 2-hour chart, price action reveals a tightening wedge, with multiple bounces off rising trendline support. The 50-period EMA at $33.18 and the 200-period EMA at $32.95 are guiding short-term momentum.
Silver faces immediate resistance at $33.44 and support around $32.98. A confirmed breakout above $33.44 could target $33.70 or higher, while a breakdown below the trendline may lead to declines toward $32.62 or even $32.42.
Given the current indecision, analysts recommend a patient, wait-and-see approach until a breakout occurs.
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