Gold prices are still under some mild pressure as of Friday morning, trading slightly below $3,300. This comes with a small rise in the US dollar. Investors are being more careful as they wait for important inflation data later today.
A combination of economic and geopolitical developments continues to impact market sentiment. A US federal appeals court changed a past decision. This decision had stopped tariffs set by President Donald Trump. On Thursday, the court restored these tariffs. Investor risk aversion is a result of the decision's introduction of new uncertainty into the dynamics of global trade.
Gold has found some support despite the decline in price as traders wait for a potential change in US interest rate policy. If inflation keeps falling and economic risks rise, markets expect the Fed to cut rates twice before the end of 2025. Lower interest rates generally devalue the US dollar and make non-yielding assets like gold more appealing.
Geopolitical tensions are still high in the interim. Gold is seen as a safe investment. This is due to reports of ongoing ceasefire talks between Israel and Hamas. There is also unrest around peace talks between Russia and Ukraine.
Technically speaking, gold encounters immediate resistance in the $3,325–$3,326 range, with additional obstacles located around $3,350. The downside support is at $3,280. A drop below this could lead to a fall to the recent low of around $3,245. It might even go lower, to $3,200.
Everyone is watching to see if inflation is slowing down. The US Personal Consumption Expenditure (PCE) Price Index report is due later today. The result will likely influence what the Federal Reserve does next. It may also cause changes in the gold and US dollar markets.
As inflation trends, geopolitical risks, and interest rate changes are balanced, gold shows the bigger economic picture. Traders need to be well-versed in these factors in order to navigate price volatility and identify market opportunities.
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