Gold News: Profit-Taking Stalls Rally Amid Tariff Uncertainty as PCE Data Looms

Profit-Taking Halts Gold’s Rally

Gold prices steadied on Wednesday, consolidating after Tuesday’s sharp 2% decline. The yellow metal had surged to a record high of $2,956.31 on Monday, prompting profit-taking among traders. Despite the pullback, market sentiment remains largely bullish, with analysts viewing this as a potential near-term correction rather than a shift in trend.

Gold’s chart pattern since mid-December has shown consistent buying on 1 to 2-day pullbacks, suggesting a well-supported market. Key pivot price support levels to watch include $2,910.32, $2,895.29, $2,864.26, and $2,843.43. On the upside, a break above $2,956.31 could pave the way for a push towards the major psychological target of $3,000.

At 12:00 GMT, XAU/USD is trading $2913.75, down $1.29 or -0.04%.

Trump’s Tariff Plans and Inflation Concerns

Market attention remains fixed on U.S. President Donald Trump’s tariff policies, which could drive inflation and spark trade disputes. On Tuesday, Trump ordered a probe into potential new tariffs on copper imports, adding to uncertainty. While inflation concerns typically support gold as a safe-haven asset, higher U.S. Treasury yields and a stronger dollar are capping gains on Wednesday.

Analysts note that while the sell-off mirrored weakness in equities and bitcoin, gold quickly found support through bargain hunting. Ross Norman, an independent analyst, highlighted that the recent dip might stimulate physical demand and offer a fresh entry point for those who missed the earlier bull run.

Impact of U.S. Economic Data on Gold

Traders are also closely monitoring U.S. economic data, particularly Friday’s Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred inflation gauge. Rising price pressures from tariffs could influence the Fed’s interest rate policy, with higher rates generally reducing gold’s appeal due to its non-yielding nature.

Treasury yields rose on Wednesday as investors awaited new home sales data and assessed a series of weak economic indicators, including disappointing consumer confidence and softer purchasing managers’ data. These mixed signals add complexity to gold’s outlook, as slowing economic growth could reignite safe-haven demand.

Market Forecast: Bullish Bias Despite Near-Term Volatility

While gold prices may continue to experience short-term volatility, the broader outlook remains bullish. A sustained hold above $2,910.32 would reinforce the current uptrend, while a break through $2,956.31 could accelerate the push towards the $3,000 mark. Central bank demand and geopolitical risks are likely to provide additional support, making gold an attractive option for traders seeking stability amid market uncertainty.

More Information in our Personal Consumption Expenditures (PCE) report.