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Gold showed a minor pullback from the temporary bottom of $2833. It hit an all-time high of $2954 and is currently trading around $2859.
Inflation's Steady Pulse: Core PCE Inches Up
The Core PCE Price Index, a key inflation measure monitored by the Federal Reserve, rose 0.3% month over month in January 2025, as forecasted, following a 0.2% rise in December 2024. The index, excluding food and energy prices that are volatile, provides insight into underlying inflation patterns. Annually, the Core PCE Price Index increased by 2.6% in January 2025, from a 2.8% climb in December 2024. This modest decline in inflation pressures maintains the rate of inflation well above the 2% federal target.
Trump's Tariff Barrage: Market Jitters Emerge
President Trump's confirmation of 25% tariffs on Mexican and Canadian imports, to start on March 4, 2025, has been quite a concern in the market sentiment. At the same time, there will be an additional tariff of 10% on Chinese products, motivated by concerns related to the steady stream of illegal drugs, led by fentanyl. The declaration ends previous uncertainties around the prospect of delayed imposition of tariffs. Investors are showing concern regarding the potential inflationary effects of these widened tariffs, which may increase costs both for consumers and businesses. Economists warn that these actions could work as an indirect tax, which can halt economic growth.
Rate Pause Hopes to Fade
According to the CME Fed Watch tool, the chances of a rate pause in Mar 19th 2025 meeting have decreased to 93% up from 96% a week ago.
Technical Analysis: Key Levels and Trading Strategy
Gold prices are holding below short-term moving averages 34 EMA and 55 EMA and above long-term moving averages (200 EMA) in the 4-hour chart. Immediate support is at $2830 and a break below this level will drag the yellow metal to $2800/$2770/$2740. The near-term resistance is at $2880, with potential price targets at $2900/$2920/ $2940/$2957/$3000. It is good to buy on dips around $2850 with a stop-loss at $2830 for a target price of $3000.
