Gold Price (XAU/USD) Surges Toward $2,900 – Can the Rally Continue or Will Bears Return?
Gold Gains Momentum as Geopolitical and Economic Uncertainty Increases
Gold (XAU/USD) has surged above $2,888, snapping a two-day losing streak as safe-haven demand fuels a strong rebound. The recent rally follows a sharp downturn last week, when the metal fell to a three-week low of $2,832 amid renewed U.S. dollar strength and shifting expectations on Federal Reserve rate policy. However, with geopolitical tensions escalating, concerns over President Trump’s proposed tariffs, and growing fears of a potential U.S. economic slowdown, gold has found fresh demand, with traders eyeing a potential breakout above $2,900.
The Atlanta Federal Reserve’s GDP Now forecast has turned sharply negative, plunging from -1.6% to -2.8%, a sign that the U.S. economy may be slowing more than expected. This has significantly weakened the dollar, making gold more attractive to investors. Adding to the bullish momentum, U.S. Treasury yields have declined, with the 10-year Treasury note dropping two basis points to 4.17%, further boosting gold’s appeal as a hedge against economic uncertainty.
Trump’s Tariff Threats and Ukraine Tensions Drive Safe-Haven Demand for Gold
The latest geopolitical developments have provided another strong catalyst for gold prices. Over the weekend, President Trump clashed with Ukrainian President Volodymyr Zelenskyy, casting doubts on Washington’s continued support for Ukraine. Meanwhile, Trump’s plans to impose 25% tariffs on imports from Mexico and Canada and an additional 10% tariff on Chinese goods are set to take effect this week, further stoking market uncertainty.
Trade wars have historically benefited gold as investors seek safety from economic volatility. The current situation is no different, as fears of global supply chain disruptions and retaliatory tariffs add to concerns about slower economic growth. If these tariffs take effect, gold could push beyond $2,900, with the potential to retest its all-time high of $2,956 in the coming sessions.
Market Expectations for the Federal Reserve’s Next Move Boost Gold Prices
Another key driver for gold is the shifting outlook on Federal Reserve policy. The latest U.S. ISM Manufacturing PMI for February came in at 50.3, down from 50.9, and below market expectations of 50.5, signaling a mild slowdown in business activity. At the same time, the S&P Global Manufacturing PMI surprised to the upside, rising to 52.7 from 51.2, indicating continued expansion in the sector.
However, traders are increasingly betting on Fed rate cuts, with money markets now pricing in 71 basis points of easing by the end of 2025, up from 58 basis points last week. Lower interest rates tend to weaken the U.S. dollar and increase gold’s attractiveness, as the metal does not offer a yield.
Gold (XAU/USD) Technical Outlook – Can Bulls Push Above $2,900?
Gold’s recovery has been impressive, but key resistance levels remain in place. The metal has bounced off the $2,832 support level, with buyers stepping in aggressively to push prices back above $2,850. The next major resistance stands at $2,900, a critical psychological level. A sustained daily close above this level could see gold rally toward its year-to-date high of $2,954.
The Relative Strength Index (RSI) on the daily chart remains in bullish territory, suggesting that momentum favors the upside. However, the 20-day Simple Moving Average (SMA) at $2,899.50 is currently acting as a dynamic resistance level. If gold fails to break above this area, it could consolidate before making another move higher.
If bullish momentum weakens, support levels at $2,876 and $2,858 will be key to watch. A break below $2,845 could trigger a deeper pullback toward the $2,800 region, where the 50-day Exponential Moving Average (EMA) sits as a strong support zone.
Is Gold a Buy, Sell, or Hold at Current Levels?
Despite last week’s sell-off, gold’s long-term bullish trend remains intact, with strong support coming from geopolitical risks, Fed rate cut expectations, and ongoing trade tensions. As long as uncertainty persists, gold remains a buy-on-dips asset, especially if price action holds above $2,850.
However, a failure to break above $2,900 could lead to short-term consolidation, and traders should watch for potential profit-taking near resistance levels. If the Federal Reserve signals a delay in rate cuts or if U.S. economic data surprises to the upside, gold could struggle to maintain its gains.
For now, the bias remains bullish, but traders should be cautious of sharp pullbacks if market sentiment shifts. A sustained move above $2,900 would confirm further upside, with the next target set at $3,000, a level many analysts believe gold can reach given the current macroeconomic environment.
With tariff decisions, geopolitical risks, and U.S. economic data releases looming, expect volatility in gold prices in the coming days. For traders, the best strategy is to stay long while monitoring key support and resistance zones closely.
