Gold Prices Steady Above $2,900 Amid US Tariff Tensions

February 27th, 2024 | Dailyforex.pk

Gold prices continue to trade in positive territory, holding firm near $2,920 in early Thursday’s Asian session. Geopolitical uncertainties, escalating US trade tariffs, and safe-haven demand are fueling interest in the precious metal. However, a hawkish Federal Reserve (Fed) stance on inflation could limit the upside potential for gold in the near term.

US Tariffs Drive Gold’s Safe-Haven Demand

The latest trade tensions under the Trump administration have reignited concerns in global markets. On Wednesday, President Donald Trump reaffirmed his commitment to imposing a 25% tariff on imports from Canada and Mexico. Additionally, the European Union (EU) has now been added to the list of trading partners facing penalties, with the tariffs scheduled to take effect on April 2.

This move has increased market uncertainty, prompting investors to seek refuge in gold as a safe-haven asset. Historically, economic and geopolitical risks tend to boost demand for gold prices, as investors hedge against potential market turbulence.

Can The Federal Reserve Cap Gold’s Bullish Momentum?

While the ongoing tariff battle supports gold prices, there is also a growing concern that inflationary pressures could influence the Federal Reserve’s monetary policy. If tariffs drive up costs, the Fed may choose to keep interest rates elevated for an extended period, reducing the appeal of non-yielding assets like gold (XAU/USD).

Despite this, analysts believe the long-term bullish trend for gold remains intact. David Meger, director of metals trading at High Ridge Futures, stated:
“We continue to see an overall upward trend. This appears to be routine profit-taking rather than a shift in sentiment.”

Key Levels to Watch for XAU/USD

Gold is currently trading around $2,920, with critical resistance and support levels shaping its next move:

🔹 Immediate Resistance: $2,940 – A breakout above this level could push gold toward the psychological $3,000 mark.
🔹 Key Support: $2,900 – If selling pressure builds, gold may test this support, with further downside risk toward $2,875.

What’s Next for Gold Prices?

With tariff policies, Fed rate decisions, and inflation concerns dominating the market, gold’s trajectory will depend on upcoming macroeconomic developments. If tensions escalate and economic uncertainty persists, gold prices could remain well-supported in the coming weeks.

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