Gold Prices Jump 2% as Tariff Concerns and Ukraine Crisis Shake Markets

Gold prices climbed 2% on Monday, reaching $2,866, as rising geopolitical risks and trade tensions fueled investor demand for safe-haven assets.

The dollar index (DXY) slipped 0.4%, making bullion more affordable for foreign buyers.

The surge was partly driven by escalating uncertainty over the Ukraine-Russia peace deal, which was expected to bring stability but has now been delayed indefinitely. According to Kelvin Wong, senior market analyst at OANDA, this delay has reinforced the bullish tone in gold markets, particularly in early Asian trading sessions.

Meanwhile, concerns over U.S. tariffs on Canada, Mexico, and China have added to market volatility. President Donald Trump reaffirmed plans for a 25% tariff on North American imports, with additional duties on Chinese goods set to double from 10% to 20% starting Tuesday. These trade tensions have increased investor anxiety, pushing funds into gold and other safe-haven assets.

Key Takeaways:

• Gold jumps 2% as investors seek safety amid geopolitical instability.

• Ukraine-Russia peace deal delay adds to uncertainty, boosting demand.

• Trump’s tariffs on North America and China increase market volatility.

Fed Rate Policy and Inflation Concerns Weigh on Gold

Despite rising gold prices, higher U.S. inflation data could complicate the Federal Reserve’s path to rate cuts. January’s consumer spending report showed a surprising decline, but inflation remained strong, giving the Fed room to delay rate cuts.

The Personal Consumption Expenditures (PCE) price index rose 0.3% in January, bringing the annual rate to 2.5%, while core PCE slowed to 2.6% from 2.9% in December. Though these figures matched expectations, they signaled that inflation remains sticky, reducing the likelihood of an immediate policy shift.

Gold is typically seen as a hedge against inflation, but rising real interest rates reduce its appeal. If the Federal Reserve maintains a hawkish stance, gold’s upside could be limited. Investors should watch for Fed Chair Jerome Powell’s remarks this Friday, which could influence market expectations on future rate decisions.

Key Takeaways:

• January’s inflation data remained firm, delaying potential Fed rate cuts.

• Higher real interest rates could pressure gold’s rally.

• Traders await Powell’s speech for further monetary policy cues.

Technical Analysis: Will Gold Break Resistance?

Gold is currently trading at $2,866, attempting to recover from recent declines. The 4-hour chart shows gold has found support at $2,855 (0.236 Fibonacci retracement), with a modest rebound toward $2,877 (50% Fibonacci level).

However, gold remains below the 50-day EMA ($2,899), reinforcing the bearish trend. If prices fail to break above $2,877, sellers may regain control, pushing XAU/USD toward $2,834 and possibly $2,822.

Key Price Levels:

• Pivot Point: $2,877

• Immediate Resistance: $2,877

• Next Resistance: $2,902

• Next Resistance: $2,920

• Immediate Support: $2,855

• Next Support: $2,834

• Next Support: $2,822

Technical Indicators:

• 50 EMA: $2,899 (Resistance)

• Fibonacci Levels: Resistance at $2,877 (50% Fib), support at $2,855 (0.236 Fib)

Conclusion:

Gold remains bearish below $2,899, with $2,877 serving as key resistance. A break above $2,880 could trigger bullish momentum, while failure to hold $2,855 support may push gold lower.

Summary Bullet Points:

• Gold rises 2% amid geopolitical concerns and trade tensions.

• Sticky inflation data could delay Fed rate cuts, impacting gold’s outlook.

• Technical resistance at $2,877 must be cleared for further upside.

Gold remains at a critical juncture, with macroeconomic risks and Fed policy decisions shaping its next move.