- Summary:
- Gold price has declined slightly on Monday, but it is difficult to see an extended downside with trade tariffs providing fuel.
Gold price eased down during Monday’s European trading session, going for $2,906 per ounce at the spot market, with its daily returns at -0.3% at the time of writing. The commodity is a central focus amidst trade tariff wars featuring some of the world’s leading economies.
However, recent readjustments to US trade tariff policies by President Donald Trump signal the possibility of negotiations and a resolution in the coming weeks. That could limit gold price upside in the medium term.
Trump might have spooked investors on Sunday following his commentary that the US economy was “in a transition” and reluctance to outrightly deny the possibility of a recession. The world’s largest economy already flashed signs of an underlying weakness on Friday following the release of lower-than-expected Non Farm Payrolls (NFP) numbers and a 0.1% jump in unemployment rate in February.
Meanwhile, China continues to provide fuel for gold price upside, with its central bank maintaining appetite for the yellow metal. The country’s central bank bought over $2.1 billion worth of gold in February extending its purchase program to the fourth successive month.
That trend will likely continue if the trade tariff war continues to escalate. China will start imposing retaliatory 10%-15% import tariffs on agricultural products from the US, including soybean, pork ,sorghum, fruits and vegetables this week. This sets up safe haven gold for a continued upside.
Gold Price Prediction
Gold price pivots at $2,900 and action above that level will favour the upside to prevail. That will likely meet the first barrier at $2,910. However, an extended control by the buyers could extend gains to break past that level and potentially test the second resistance at $2,917.
Conversely, action below $2,900 will favour the sellers to take control. That could see the XAUUSD pair go lower to find initial support at $2,894. The upside narrative will be invalid if the price breaks below that level. The resulting momentum could extend the downtrend to test the second support at $2,890.
