Spot Gold in a Correction Phase: Will It Rise Again and Target the $3,000 Level?
- Gold is struggling to maintain its upward momentum this week, with markets awaiting the release of U.S. consumer inflation data for fresh signals regarding the Fed's rate-cut path and to determine the near-term trajectory for the U.S. dollar and the non-yielding gold. The U.S. dollar is attracting some buyers following comments from Federal Reserve Chair Jerome Powell, coupled with an overall positive risk tone that threatens gold's resilience at its peak.
?- However, concerns regarding new tariffs imposed by U.S. President Donald Trump on commodity imports and promised retaliatory tariffs, along with geopolitical risks, should continue to serve as a tailwind for gold prices as a safe haven. This, in turn, necessitates caution before confirming that the yellow metal has peaked in the near term and is heading towards any meaningful corrective decline from the historical peak around $2,942.62 that was reached in February 2025 amid fears of a trade war.
?- Federal Reserve Chair Jerome Powell stated in remarks before the Senate Banking Committee that the economy is generally strong with a solid labor market, and that inflation is easing but still above the 2% target. This follows positive U.S. employment data and expectations that Donald Trump's policies could reignite inflationary pressure, allowing the Fed to maintain its hawkish stance.
?- The U.S. dollar is gaining positive momentum amid increased bets that the Fed will keep interest rates steady in the foreseeable future, putting pressure on gold prices. U.S. President Donald Trump signed executive orders to impose a 25% tariff on steel and aluminum imports to the United States and promised broader retaliatory tariffs to match the levies imposed by other governments on U.S. products.
?- Trump also indicated that he would consider imposing additional tariffs on cars, pharmaceuticals, and computer chips, raising concerns about a global trade war and acting as a tailwind for the precious metal as a safe haven.
?- The headline U.S. Consumer Price Index is expected to rise by 2.9% year-on-year in January, while the core CPI (excluding food and energy prices) is projected to come in at 3.1% year-on-year, slightly down from the 3.2% recorded in December.
Gold Prices' Possible Moves
?- Any further pullback is still seen as a buying opportunity for gold, with $2,855 representing the first good long level. This is followed by $2,834, if broken, the yellow metal could retreat to $2,800.
?- Alternative Scenario: Bulls may now wait for a move to break above $2,910. Subsequent developments regarding the global trade war and geopolitical tensions could lift gold prices again, potentially re-testing the historical peak at $2,942.62, in an attempt to reach the $3,000 level per ounce.