Gold News: Dollar Surge and Tariff Fears Put XAU/USD on Path to $2,770

Gold Prices Slip for a Second Straight Session

Gold is trading lower on Friday, marking its second consecutive session of losses and the third drop in four sessions. The yellow metal is under pressure as traders largely disregard minor support pivots, signaling a potential retreat to key technical levels. Current downside targets include the previous top at $2,790.17, the 50-day moving average at $2,770.22, and the retracement zone between $2,770.11 and $2,726.17.

Former support levels have now flipped into resistance, with barriers expected at $2,864.26, $2,895.26, and $2,910.32. The market is also at risk of closing the week with a bearish weekly reversal top, which could trigger a deeper correction lasting 2 to 3 weeks.

At 11:47 GMT, XAU/USD is trading $2861.41, down $15.78 or -0.55%.

First Weekly Loss in Nine Weeks Looms

Gold is on track for its first weekly loss in nine weeks, driven by a strengthening U.S. dollar and investor caution ahead of the U.S. Personal Consumption Expenditures (PCE) data. The dollar index has climbed to 107.451, gaining nearly 0.9% on Thursday alone. A stronger dollar makes gold more expensive for international buyers, pressuring prices.

The greenback found support as U.S. President Donald Trump announced 25% tariffs on Mexican and Canadian goods starting March 4, along with an additional 10% duty on Chinese imports. The risk-off sentiment buoyed the dollar despite a generally weaker economic outlook in the U.S.

Inflation Data Could Shift Market Sentiment

Traders are eyeing the upcoming PCE data, the Federal Reserve’s preferred inflation gauge, due at 13:30 GMT. Expectations are for a 0.3% month-over-month increase and a 2.5% annual rise. Core PCE, excluding food and energy, is projected to increase by 0.3% monthly and 2.6% yearly.

If the PCE data shows cooling inflation, it could bolster expectations for further Federal Reserve rate cuts, potentially weakening the dollar and offering support to gold prices. However, higher interest rates generally diminish the appeal of non-yielding assets like gold.

Market Jitters as Tariff Threats Cloud Outlook

Investor sentiment remains cautious as Trump maintains a hard stance on tariffs. His proposed 25% tariffs on European Union imports, initially set for Wednesday, are now uncertain following discussions with U.K. Prime Minister Keir Starmer. While Trump hinted at a potential trade deal, uncertainty persists, contributing to market volatility.

Market Forecast: Bearish Bias Prevails

The current technical setup and external market pressures suggest a bearish outlook for gold. If prices break below the $2,843.43.11 support level, deeper losses toward $2,770.22 could follow. A confirmed weekly reversal top would further amplify bearish sentiment, potentially leading to a multi-week correction.

Traders should monitor the PCE inflation data closely, as a weaker-than-expected print could alter the market narrative. However, with the dollar showing strength and safe-haven flows favoring the greenback, gold faces significant headwinds in the near term.

More Information in our Economic Calendar.