Gold prices experienced a significant corrective move, breaching the key $2,900 per ounce troy mark amidst a changing market landscape. This development unfolded as the US Dollar gained upward momentum following Wall Street's opening, trading strongly against commodities and their linked rivals. The shift in market dynamics was further influenced by a decline in consumer confidence, with the US CB Consumer Confidence Index dropping to 98.3 in February from 104.1 in January.
President Donald Trump's revival of tariff-related concerns has added to the market's risk aversion. Trade Advisor Peter Navarro clarified that US authorities are negotiating with Mexico and Canada, indicating that tariffs will depend on the progress of these negotiations. The planned tariffs have heightened market apprehension, contributing to a bearish sentiment in the tech sector, with the Nasdaq Composite down approximately 330 points.
The XAU/USD pair has turned bearish in the near term, prompting speculation that it could approach the $2,800 region. The 20 Simple Moving Average (SMA) is currently serving as dynamic resistance at around $2,936.20, while the 100 SMA also provides resistance. Technical indicators are heading firmly south near oversold readings, suggesting potential for further declines. The daily chart for the XAU/USD pair indicates that if the price breaks below the bullish 20 SMA, the bearish corrective decline could continue.
Despite these developments, the 100 and 200 SMAs remain oriented northward well below the shorter SMA, limiting the potential for a sustained bearish move. This technical setup presents a complex picture for investors and traders as they navigate the current market conditions.
The drop in consumer confidence has rekindled recession concerns, compounding the market's cautious outlook. As consumers become increasingly pessimistic, economic indicators may continue to reflect this sentiment, influencing commodity prices and investor behavior.
In light of these market movements, it is crucial to note that this article contains forward-looking statements that involve risks and uncertainties. Neither the author nor FXStreet are registered investment advisors, and nothing in this article is intended to be investment advice.