Gold Prices Drop to $2,892: Will the Bearish Trend Continue?
Gold (XAU/USD) slipped to $2,892 on February 27, 2025, reflecting a 0.45% decline as a stronger U.S. dollar and rising Treasury yields weighed on the metal’s appeal.
The U.S. Dollar Index (DXY) rose by 0.2%, moving away from its 11-week lows, driven by uncertainty surrounding U.S. President Donald Trump’s vague tariff threats on Europe and delays in levies for Canada and Mexico.
| Broker | Review | Regulators | Min Deposit | Website | |
|---|---|---|---|---|---|
| 🥇 |  | Read Review | FCA, CySEC, ASIC, MAS, FSA, EFSA, DFSA, CFTC | USD 100 | Visit Broker |
| 🥈 |  | Read Review | FSCA, FSC, ASIC, CySEC, DFSA | USD 5 | Visit Broker |
| 🥉 |  | Read Review | CySEC, MISA, FSCA | USD 25 | Visit Broker |
| 4 |  | Read Review | ASIC, BaFin, CMA, CySEC, DFSA, FCA, SCB | USD 200 | Visit Broker |
| 5 |  | Read Review | ASIC, FCA, CySEC, SCB | USD 100 | Visit Broker |
| 6 |  | Read Review | FCA, FSCA, FSC, CMA | USD 200 | Visit Broker |
| 7 |  | Read Review | BVI FSC | USD 1 | Visit Broker |
| 8 |  | Read Review | CBCS, CySEC, FCA, FSA, FSC, FSCA, CMA | USD 10 | Visit Broker |
| 9 |  | Read Review | ASIC, CySEC, FSCA, CMA | USD 100 | Visit Broker |
| 10 |  | Read Review | IFSC, FSCA, ASIC, CySEC | USD 1 | Visit Broker |
The yield on the 10-year U.S. Treasury note rebounded, further reducing gold’s attractiveness as a non-yielding asset. According to Ilya Spivak, head of global macro at Tastylive, “A light pickup in the dollar and U.S. Treasury yields is pressuring gold in this session, although the broader uptrend remains intact.”
Investors are now turning their attention to the upcoming Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred inflation gauge, due on Friday. Market consensus expects the PCE monthly index to remain steady at 0.3%, while the core number is projected to increase to 0.3% from 0.2%. Any deviation from these expectations could significantly impact gold prices.
Gold Technical Analysis: Bearish Momentum Below Key Support
Gold is currently trading below the critical $2,905 support zone, which previously served as a demand area. This breakdown signals growing bearish momentum as the metal struggles to reclaim the 50-day Exponential Moving Average (EMA) at $2,923.
Immediate support is located at $2,878, with a more robust floor at $2,859. A break below $2,878 could accelerate selling pressure, potentially driving prices down to $2,834. On the upside, if buyers regain momentum, resistance is anticipated at $2,905 and $2,922, the latter coinciding with the 50 EMA and the recently broken support-turned-resistance zone.
The bearish trend is further confirmed by the price action falling below the ascending trendline and the 50 EMA, indicating ongoing selling pressure. Traders should closely watch for a retest of the $2,905 level, which could act as resistance before another downward move.
Key Levels to Watch:
Immediate Resistance: $2,905
Next Resistance: $2,922
Immediate Support: $2,878
Major Support: $2,859
Critical Support: $2,834
Market Sentiment and Economic Outlook
The current bearish sentiment in the gold market is linked to several macroeconomic factors. The stronger dollar, combined with rising Treasury yields, has dampened gold’s appeal as an inflation hedge. Moreover, uncertainty surrounding U.S. trade policies and geopolitical tensions continue to create market volatility.
Several Federal Reserve officials are scheduled to speak later today, potentially offering more insight into the Fed’s monetary policy stance. Currently, traders expect 58 basis points worth of rate cuts by December, according to LSEG data. However, a stronger-than-expected PCE outcome could alter these expectations, leading to a more hawkish Fed stance, which would be bearish for gold.
While gold is traditionally viewed as a safeguard against political and economic risks, rising interest rates diminish its attractiveness as a non-yielding asset. With the upcoming inflation data, traders are likely to remain cautious, awaiting further confirmation of the Fed’s rate path.
Summary and Outlook:
Gold Breaks Key Support: Fell below $2,905, signaling bearish momentum.
Immediate Support at $2,878: A break could push prices to $2,834.
Upcoming PCE Data: Market awaits inflation figures for Fed rate clues.
Dollar and Yield Impact: Stronger dollar and rising yields weigh on gold.
ABOUT THE AUTHOR
See More
Sidebar rates
Add 3442
Related Posts
SaveAdd 3440
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals
Top Broker