Gold Faces Resistance Below $2,900

Gold prices (XAUUSD) remain under pressure below the $2,900 mark as the European session approaches on Tuesday. Although downside momentum is limited, rising trade tensions and economic uncertainty continue to influence market sentiment. The US Dollar (USD) gains strength on expectations that President Donald Trump's proposed tariffs could reignite inflation, forcing the Federal Reserve (Fed) to maintain higher interest rates for longer. This outlook weighs on the non-yielding yellow metal.

At the same time, fears of a global trade war and geopolitical instability fuel investor caution, limiting risk appetite. Concerns over Trump's protectionist policies, along with rising tensions between the US and Ukraine, have weakened equity markets, prompting some support for gold as a safe-haven asset. However, investors remain cautious ahead of Friday’s US Nonfarm Payrolls (NFP) report, preferring to wait before committing to new positions in XAUUSD.

From a technical perspective, failure to break above $2,900 signals caution for bullish traders. While oscillators on the daily chart have lost some momentum, they remain in positive territory, suggesting potential buying interest near the $2,860 support level. A break below last Friday’s multi-week low of $2,832 could accelerate losses toward $2,800. Conversely, sustained strength above $2,900 may push prices toward $2,934, with a potential retest of last Monday’s high at $2,956.

Gold rebounded over 1% on Monday, snapping a two-day decline as the USD weakened amid safe-haven demand and falling US Treasury yields. At the time of writing, XAUUSD trades at $2,888. Meanwhile, new tariffs on Mexico, Canada, and China are set to take effect on Tuesday. In addition, the latest US economic data pushed the Atlanta Fed’s GDPNow Q1 2025 forecast deeper into negative territory, dropping from -1.6% to -2.8%. This worsening economic outlook has driven more investors toward gold.

Despite recent volatility, gold remains a key asset in global markets. February saw gold prices surge to $2,954 amid fears of a prolonged trade war. Financial analyst Jesse Colombo views $2,800 as a critical support level, expecting gold to test this range before rallying beyond $3,000. He attributes the recent pullback to USD strength rather than weakness in gold itself.

Looking ahead, geopolitical risks and ongoing trade tensions continue to shape gold’s trajectory. Analysts suggest that if diplomatic efforts between Russia and Ukraine fail, gold could see further gains. Ajay Kedia of Kedia Commodities predicts that as long as uncertainty persists, gold may climb toward $3,000. Meanwhile, increased demand for physical gold is evident, with Singapore-based dealer BullionStar reporting supply shortages due to a surge in institutional and retail buying.

In summary, gold prices remain at a critical juncture, facing resistance at $2,900 but supported by economic and geopolitical uncertainty. While short-term technicals suggest potential pullbacks, the broader outlook remains bullish, especially if inflation concerns and trade tensions persist. Investors will closely watch upcoming US economic data for further cues on gold’s next move.