Gold Price Analysis – Is the XAU/USD Rally Over or Just Taking a Breather?
Gold Price Pulls Back After Hitting Record Highs – What's Next for XAU/USD?
Gold (XAU/USD) surged to an all-time high of $2,956.15 per ounce before pulling back to $2,909.59, driven by a mix of profit-taking, rising bond yields, and shifting expectations on Federal Reserve rate cuts. Despite this retreat, gold remains in a strong uptrend, supported by geopolitical tensions, central bank demand, and ongoing concerns over inflation and trade policies.
The question now is whether this is a temporary consolidation or the beginning of a more significant correction. Key technical and fundamental factors are shaping gold’s next move.
Profit-Taking Triggers a Dip but Support Remains Strong
Gold’s recent rally has been relentless, with eleven record highs in 2025 alone, fueled by economic uncertainty, central bank buying, and persistent inflation fears. The pullback to $2,909 reflects short-term profit-taking after gold’s rapid ascent.
Gold speculators reduced net long positions by 13,605 contracts, signaling some caution among traders. However, safe-haven demand remains intact as trade war fears escalate. Donald Trump reaffirmed his commitment to implementing tariffs on Canadian and Mexican imports by March 4, adding another layer of uncertainty to global markets.
Bond Yields and the Fed's Next Move – A Key Driver for Gold
US Treasury yields have been fluctuating, with the 10-year yield dropping below 4.30%, the lowest since mid-December. Falling yields typically support gold as they reduce the opportunity cost of holding the non-yielding asset.
However, the Federal Reserve remains in focus. Market expectations for two rate cuts in 2025 have provided a tailwind for gold, but recent statements from Fed officials suggest a more cautious approach. Chicago Fed President Austan Goolsbee emphasized the need for more clarity before committing to further rate cuts.
The upcoming US Personal Consumption Expenditures (PCE) Price Index on Friday will be a key event, as it is the Fed’s preferred inflation gauge. If inflation remains stubbornly high, gold could face short-term pressure as rate-cut expectations get pushed further into the year.
Global Demand – Central Banks Continue Buying
While some investors are cashing out, central banks remain net buyers of gold, adding significant support to prices. The latest data from the World Gold Council (WGC) shows that physically-backed gold ETFs registered their largest weekly inflow since March 2022.
However, regional demand is mixed. China’s Shanghai gold price dipped below London quotes, indicating a slight cooling in demand. India’s February gold imports are expected to fall to their lowest level in 20 years, largely due to high prices discouraging jewelry purchases.
On the other hand, the US-listed gold ETFs GLD and IAU expanded sharply, marking their biggest weekly growth since the early days of the Russia-Ukraine war. In contrast, London’s iShares IGLN ETF shrank by 3 tonnes, and Germany’s Xetra Gold ETF remained flat, reflecting divergent regional sentiment.
Technical Outlook – Key Levels to Watch for XAU/USD
Gold remains in a strong uptrend, but the latest price action suggests a possible consolidation phase.
- Immediate support is seen at $2,900, a psychological level that has held firm so far. A break below could trigger a deeper pullback towards $2,880-$2,855.
- Stronger support lies at $2,800, near the 50-day EMA, a level that previously acted as resistance and could now provide a strong floor.
- On the upside, resistance is at $2,929, with a breakout above this level opening the door for a retest of the record high at $2,956.15.
The RSI remains elevated near 70, indicating overbought conditions but not necessarily signaling an imminent reversal. The MACD histogram prints flat green bars, suggesting a pause in momentum but leaving room for further upside.
Geopolitical Risks – A Hidden Catalyst for Gold’s Next Move
While the focus has been on economic data, geopolitics remains a key driver for gold. The ongoing trade war rhetoric from the Trump administration could fuel additional safe-haven demand.
The risk of tariffs on Canadian and Mexican imports, coupled with uncertainty surrounding US-China relations, is adding another dimension to gold’s bullish outlook. Historically, gold has thrived in periods of trade uncertainty, with prices rising sharply during the 2018-2019 US-China tariff standoff.
Gold Price Forecast – Buy, Hold, or Sell?
Gold’s retreat from its all-time high is more of a healthy correction than a reversal, as long as it stays above $2,900. The market remains bullish with strong central bank buying, resilient ETF inflows, and geopolitical uncertainties supporting prices.
However, short-term volatility remains likely. If the US PCE inflation report shows weaker-than-expected inflation, gold could push past $2,950 again. On the other hand, a stronger inflation print could put pressure on gold, bringing $2,880 or even $2,800 into focus.
Given the strong fundamental backdrop and technical support, gold remains a buy on dips, especially near $2,900-$2,880. The bigger question is whether gold can break above the psychological $3,000 level, which could trigger another wave of momentum buying.
With inflation uncertainty, rate-cut expectations, and geopolitical risks in play, gold’s bull market is far from over. Traders should stay positioned for more upside while keeping a close eye on key support levels.
