Gold remains confined in a range near all-time peak; looks to US PCE for fresh impetus

• Gold price enters a bullish consolidation phase after touching a fresh all-time peak on Friday.
• Rebounding US bond yields underpin the USD and cap the upside for the XAU/USD pair.
• Traders now look forward to the release of the US PCE Price Index for a fresh impetus.

Gold price (XAU/USD) extends its sideways consolidative price move heading into the European session and remains close to the all-time peak touched earlier this Friday. Investors remain concerned about the potential economic fallout from US President Donald Trump’s tariff plans. This, along with geopolitical tensions, might continue to underpin the safe-haven bullion. Moreover, expectations that Trump’s protectionist policies would boost inflation further benefit the precious metal’s hedge against rising price pressures. 

Meanwhile, the Federal Reserve’s (Fed) first pause since the start of its easing cycle in September and a relatively hawkish stance triggers a modest bounce in the US Treasury bond yields. This assists the US Dollar (USD) in preserving its weekly recovery gains from over a one-month low and keeps a lid on the non-yielding Gold price. Traders also seem reluctant and opt to wait for the release of the US Personal Consumption Expenditure (PCE) Price Index before placing fresh directional bets around the XAU/USD.

Gold price bulls retain control amid Trump’s tariff threats, geopolitical risks

• US President Donald Trump reiterated his threat to impose 25% tariffs on Mexico and Canada – the top two US trade partners – and warned of potential 100% tariffs if BRICS attempts to replace the US Dollar.
• Japan’s Joint Staff Office (JSO) stated that a pair of Russian Tu-95 bombers escorted by two Russian fighter aircraft carried out an eight-hour flight over the Sea of Okhotsk and Sea of Japan on Thursday.
• The US Bureau of Economic Analysis’ (BEA) first estimate published on Thursday showed that Gross Domestic Product (GDP) grew at an annualized rate of 2.3% during the October-December period. 
• The reading marked a notable slowdown from the 3.1% expansion recorded in the previous quarter and was below the market expectation of 2.6% and boosted demand for the safe-haven Gold price. 
• Investors remain concerned that Trump’s protectionist policies will reignite inflationary pressures. Adding to this, the Federal Reserve’s hawkish stance provides a modest lift to the US Treasury bond yields. 
• The US central bank decided to stand pat at the end of a two-day meeting on Wednesday and signaled that there would be no rush to lower borrowing costs until inflation and jobs data made it appropriate. 
• The US Dollar preserves its weekly recovery gains from over a one-month low, which, along with a generally positive tone around the equity markets, keeps a lid on gains for the precious metal.
• Traders now look to the release of the US Personal Consumption Expenditure (PCE) Price Index – the Fed’s preferred inflation gauge – for some impetus later during the North American session. 

Gold price seems poised to climb further while above the $2,773-2,772 area

From a technical perspective, sustained strength and acceptance above the $2,800 mark will be seen as a fresh trigger for bulls. That said, the daily Relative Strength Index (RSI) is on the verge of breaking into the overbought zone. This makes it prudent to wait for some near-term consolidation or a modest pullback before placing fresh bullish bets around the Gold price and positioning for an extension of the strong move-up witnessed over the past month or so.

Meanwhile, any corrective slide is more likely to find decent support and remain limited near the $2,773-2,772 horizontal zone. This is followed by the $2,758-2,756 region, which if broken might prompt some long-unwinding and drag the Gold price further towards the $2,740 area en route to the $2,725-2,720 pivotal support. A convincing break below the latter could set the stage for some meaningful downside in the near term.