Gold price prediction: Safe haven demand counters strong U.S. dollar pressure
Gold price ended an eight-week bullish streak last week, declining from its all-time high of $2,956 to a three-week low of $2,830.
The sell-off formed a daily bearish engulfing pattern, which signals a potential downtrend. However, as the new month began, gold attempted a recovery, rising 0.7% to test resistance at $2,877 before pulling back to $2,865 during the European session, still above last week’s support of $2,830.
The price drop last week was influenced by renewed strength in the U.S. dollar and shifting rate expectations. The U.S. Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation gauge, slowed to 2.5% year-over-year in January from 2.6% in December. Core PCE also eased to 2.6%, reinforcing expectations that the Fed may not rush to cut interest rates. A stronger dollar typically pressures gold by making it more expensive for foreign investors.
Gold price dynamics (Feb 2025 - March 2025). Source: TradingView.
Gold price outlook: Trump’s comments on Ukraine add safe-haven appeal
However, geopolitical tensions may fuel an upside in price movement. Over the weekend, former U.S. President Donald Trump criticized Ukrainian President Volodymyr Zelenskyy and scrapped a minerals deal, raising concerns over escalating Russia-Ukraine tensions. Any deterioration in the situation could boost demand for gold as a safe-haven asset.
Despite last week’s decline, the RSI on the daily chart remains in bullish territory, reflecting underlying optimism among traders. This suggests that gold’s long-term uptrend remains intact, and investors are still willing to buy on dips, especially with geopolitical uncertainty in focus.
While safe-haven flows could drive gold higher, the U.S. dollar’s renewed strength might continue to cap gains. If economic data remains steady and the Fed delays rate cuts, gold may struggle to sustain its upside momentum.
Gold's bullish run ended as a stronger U.S.dollar and inflation concerns triggered selling pressure. The price broke below $2,877, dropping to $2,865, while RSI retreated to neutral levels.
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