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Gold retreats slightly from one-week high; holds above $4,450 amid bullish outlook
- Gold builds on the overnight gains as rising geopolitical risks underpin safe-haven demand.
- Dovish Fed bets drag the USD away from a multi-week high and benefit the XAU/USD pair.
- The fundamental backdrop favors bulls as the focus shifts to the US NFP report on Friday.
Gold (XAU/USD) retreats slightly from a one-week high, touched earlier this Tuesday, and trades with only modest intraday gains, above the $4,450 level, heading into the European session. The fundamental backdrop, however, seems tilted in favor of bullish traders and suggests that the path of least resistance for the bullion is to the upside. The US military strikes in Venezuela, heightened political tensions between Saudi Arabia and the UAE, the unrest in Iran, and the protracted Russia-Ukraine war keep geopolitical risks in play. This, in turn, is seen as underpinning the safe-haven precious metal.
Apart from this, dovish US Federal Reserve (Fed) expectations back the case for a further near-term appreciating move for the non-yielding Gold. In fact, traders are still pricing in the possibility of two more interest rate cuts by the US central bank this year. Moreover, concerns about the Fed’s independence under US President Donald Trump’s administration drag the US Dollar (USD) away from a nearly four-week top set on Monday and validate the positive outlook for the XAU/USD pair as the focus remains glued to the closely-watched US Nonfarm Payrolls (NFP) report on Friday.
Daily Digest Market Movers: Gold bulls have the upper hand amid supportive fundamental backdrop
- President Donald Trump said on Sunday that the US might launch a second military strike on Venezuela if the remaining members of the administration do not cooperate with his efforts to get the country fixed. Trump further warned that Colombia and Mexico could also face military action if they do not reduce the flow of illicit drugs to the US.
- The developments raised concerns about regional instability in Latin America. Separately, Saudi Arabia publicly accused the United Arab Emirates of undermining its national security. This, along with the lack of progress in the Russia-Ukraine peace deal, continues to underpin the safe-haven Gold price for the second consecutive day.
- On the economic data front, the S&P Global reported on Monday that the US Manufacturing PMI held steady at 51.8, pointing to continued expansion. In contrast, the Institute for Supply Management’s (ISM) Manufacturing PMI declined to 47.9 last month, from 48.2 in November, and indicated persistent contraction in the business activity.
- The data does little to temper dovish expectations, which drags the US Dollar away from a nearly four-week high touched on Monday and turns out to be another factor that benefits the non-yielding yellow metal. In fact, the Fed is expected to lower borrowing costs in March and deliver one more interest rate cut by the end of this year.
- Traders now look forward to this week’s other US macroeconomic indicators, scheduled at the start of a new month, for more cues about the Fed’s rate-cut path. The focus, however, will remain on the US Nonfarm Payrolls report on Friday, which will drive the USD in the near-term and provide a fresh directional impetus to bullion.
Gold bullish potential seems intact while above $4,445-4,450 resistance breakpoint
From a technical perspective, the overnight breakout through the 100-hour Simple Moving Average (SMA) and a subsequent move beyond the $4,445-4,450 congestion zone could be seen as a key trigger for the XAU/USD bulls. The Moving Average Convergence Divergence (MACD) histogram has turned positive and inches higher on the 1-hour chart, placing the MACD line marginally above the signal line near the zero mark and suggesting improving momentum.
Meanwhile, the RSI stands at 68 (near overbought), rising from mid-range and supporting firm upside momentum. A push through 70 would strengthen the bull case, while failure to do so could cap gains and encourage consolidation. With price holding above the rising 100-hour SMA and MACD just positive, dips could remain shallow and the near-term bias would stay positive. The 100-hour SMA stands at $4,373.28 and should offer dynamic support.
(The technical analysis of this story was written with the help of an AI tool)
US Dollar Price This week
The table below shows the percentage change of US Dollar (USD) against listed major currencies this week. US Dollar was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.06% | -0.61% | -0.25% | 0.13% | -0.81% | -0.74% | -0.14% | |
| EUR | 0.06% | -0.56% | -0.13% | 0.19% | -0.75% | -0.68% | -0.07% | |
| GBP | 0.61% | 0.56% | 0.32% | 0.76% | -0.19% | -0.12% | 0.49% | |
| JPY | 0.25% | 0.13% | -0.32% | 0.37% | -0.58% | -0.51% | 0.15% | |
| CAD | -0.13% | -0.19% | -0.76% | -0.37% | -0.79% | -0.87% | -0.26% | |
| AUD | 0.81% | 0.75% | 0.19% | 0.58% | 0.79% | 0.07% | 0.68% | |
| NZD | 0.74% | 0.68% | 0.12% | 0.51% | 0.87% | -0.07% | 0.61% | |
| CHF | 0.14% | 0.07% | -0.49% | -0.15% | 0.26% | -0.68% | -0.61% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
