Gold price prediction: Bullish engulfing pattern and inflation signals recovery
Gold rebounds from $2,833 support, rises 1.3% to $2,895.
Gold price started March with a strong rebound, recovering from its first bearish week in 2025.
After falling 4% last week, the decline was cushioned at the $2,833 support level. Now, gold has risen 1.3% above the key $2,877 resistance level, reaching $2,895 and forming a bullish engulfing pattern. However, the price has since consolidated between $2,877 and $2,900.
This consolidation comes as the U.S. dollar strengthens amid expectations that President Trump’s trade tariffs could stoke inflation and force the Federal Reserve to maintain higher interest rates. With tariffs on Mexico, Canada, and China taking effect today, risk appetite has weakened, adding pressure on gold. Additionally, geopolitical tensions between Trump and Ukrainian President Zelenskyy last Friday have heightened market uncertainty, leading to a mixed sentiment for the yellow metal.
Gold price dynamics (Jan 2025 - March 2025). Source: TradingView.
Gold's RSI provides further insight into market sentiment. On the 4-hour chart, the RSI remains neutral, reflecting the current consolidation phase. However, the daily RSI remains in bullish territory, suggesting that gold still has room to extend its gains. The lack of aggressive selling, despite a stronger USD, indicates underlying support for gold as investors weigh inflation risks and global uncertainties.
Gold price outlook: U.S. dollar and strong risk appetite weighs on gold price
From a contrarian perspective, gold’s inability to break higher amid safe-haven demand raises concerns about a possible short-term correction. If the USD continues to gain strength and equity markets stabilize, gold could face renewed selling pressure, potentially retesting the $2,877 support level. A break below this level could expose the $2,833 support once again.
Looking ahead, gold’s price outlook hinges on upcoming macroeconomic developments. If inflation fears intensify due to trade tariffs, gold may push towards near-term resistance at $2,920, with an ultimate target at the all-time high of $2,956. However, if market conditions stabilize and the USD remains firm, gold’s upside momentum may be capped, leading to further consolidation in the short term.
Gold fell last week as a stronger U.S. dollar and shifting rate expectations weighed on demand. The decline formed a bearish engulfing pattern, signaling a potential downtrend.
