Usman Salis
Gold (XAU) stays close to its all-time peak, maintaining modest gains ahead of the US Nonfarm Payrolls (NFP) report. Trade war tensions and expectations of Federal Reserve rate cuts continue to fuel demand for the safe-haven asset.
Gold (XAU) Price Steadies Near Record Levels
Gold (XAU/USD) continues to hold onto modest intraday gains during the European session on Friday, remaining close to its record high reached earlier this week. The escalating trade tensions between the US and China, combined with the uncertainty surrounding President Donald Trump's aggressive trade policies, have reinforced the safe-haven appeal of gold.
Additionally, the US Dollar (USD) struggles to gain momentum as investors anticipate two potential rate cuts from the Federal Reserve in 2025. This has driven a sharp decline in US Treasury bond yields, further supporting gold prices. The upcoming US Nonfarm Payrolls (NFP) report is expected to provide key insights into the Fed’s next policy moves, influencing the demand for the precious metal.
US-China Trade War Escalation Boosts Gold (XAU) Demand
Tensions between the world's two largest economies have intensified after China announced retaliatory tariffs on certain US goods. This follows Trump’s decision to impose a 10% levy on Chinese imports, renewing fears of prolonged trade disputes. The heightened economic uncertainty has pushed investors toward safe-haven assets like gold (XAU), supporting its recent price surge.
Meanwhile, US economic data has painted a mixed picture. The Department of Labor (DoL) reported that new unemployment claims rose to 219K for the week ending February 1, up from the previous week’s revised 208K. This data, along with weak Treasury yields, continues to weigh on the US Dollar and bolster gold prices.
Fed Rate Speculations Keep Gold (XAU) in Focus
US Treasury Secretary Scott Bessent emphasized that the Trump administration is not overly concerned about the Federal Reserve’s interest rate trajectory but remains focused on lowering 10-year Treasury yields. The benchmark 10-year US bond yield recently dropped to its lowest level since December 12, reinforcing market bets on two Fed rate cuts by the end of 2025.
Chicago Fed President Austan Goolsbee pointed out that inflation concerns remain, though recent slowdowns are largely due to base effects. Meanwhile, Dallas Fed President Lorie Logan stated that although inflation has eased, the US labor market remains strong enough to delay immediate rate cuts. These mixed signals from Fed officials have kept gold (XAU) investors cautious ahead of the NFP report.
Gold (XAU) Faces Resistance but Retains Bullish Outlook
From a technical perspective, gold (XAU/USD) continues its strong uptrend, supported by its recent bounce. However, the Relative Strength Index (RSI) suggests that gold is slightly overbought, warranting caution for bullish traders. A period of consolidation may be necessary before another significant upward move.
Key support levels include the $2,855 horizontal zone, followed by $2,834. A break below $2,800 could trigger technical selling, pushing gold toward the $2,773-$2,772 region. On the upside, if gold successfully breaks its recent high, it could pave the way for new all-time peaks.
As market participants await the US NFP report, gold (XAU) remains at a pivotal level, with economic data and Fed rate expectations set to dictate its next directional move.
Usman Salis
