Gold (XAU/USD) was on track to hit a fresh all-time high as the weekend approached, maintaining a strong bullish trend before experiencing a sharp pullback at the close of Friday’s session.
Traders are now assessing geopolitical risks and economic indicators to determine the next move for gold prices. Will this correction be short-lived, or is a deeper retracement on the horizon?
Profit-taking was evident in late Friday sessions as U.S. retail sales dipped in January. With ongoing peace talks between the U.S. and Russia regarding the Ukraine conflict, will this correction be short-lived?
Technical Analysis: Key Support and Resistance Levels
The latest chart shows gold trading at $2,882, indicating a pullback from recent highs. The first major support level is at $2,870, aligned with the daily Pivot Point.
Below this, S1 support at $2,850 and S2 support at $2,790 serve as critical levels to prevent further declines. If bearish momentum intensifies, gold could test the $2,760 mark.
On the upside, gold must reclaim R1 resistance at $2,900 to sustain bullish momentum. Beyond that, R2 resistance at $2,920 and the psychological $2,950 level will be key targets.
If buying pressure persists, the $3,000 mark could come into play, serving as a major psychological milestone.
Fundamental Overview: Safe-Haven Demand on the Rise
Gold is currently trading around $2,882, maintaining strong bullish momentum. The recent surge is driven by heightened geopolitical tensions and economic uncertainty.
U.S. President Donald Trump's recent executive order for reciprocal tariffs has fueled concerns over trade wars, prompting investors to seek safe-haven assets like gold.
Additionally, a weaker U.S. Dollar (USD) is providing further tailwinds for gold. The delay in tariff implementation opens a window for negotiations, reducing immediate flight-to-safety concerns.
However, inflationary pressures continue to support higher gold prices, as traders remain cautious about the Federal Reserve’s next moves.
Market Movers: Key Economic Events to Watch
U.S. Retail Sales (January 2025): Retail sales fell by 0.9% in January, the largest drop in nearly two years, raising concerns about consumer spending and economic momentum.
Geopolitical Risks: The U.S. is preparing to mediate peace talks between Russia and Ukraine, aiming to end the nearly three-year-long conflict. These developments could influence gold's trajectory as investors assess the potential impact on global stability.
PCE Inflation Data: This report will be closely monitored, as it could determine gold’s next move. A hotter-than-expected reading may push gold higher, while signs of cooling inflation could trigger a short-term pullback.
Gold Price Forecast: Can $3,000 Be Reached?
Gold remains in a strong uptrend, underpinned by trade tensions and inflation risks. A breakout above $2,950 could pave the way for a test of $3,000.
However, a failure to hold key support levels might signal a deeper correction.
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