In a week marked by heightened economic concerns and market volatility, the gold price has faced significant pressure, trading near two-week lows below $2,900 during Friday's Asian trading hours. The broader market sentiment remains undermined by a slump in Nvidia and other "Magnificent Seven" Wall Street mega-cap stocks. Additionally, the ongoing decline in US Treasury bond yields, which have been flirting with 11-week lows around 4.20%, further complicates the landscape for investors. The USD/JPY pair also contends with intense selling pressure, trading near 149.50, as traders continue to navigate an uncertain financial environment.
The end-of-the-month financial flows and commentary from US President Trump are expected to play pivotal roles in driving gold price action. Despite recent struggles, gold remains above the 14-day Relative Strength Index (RSI), which is currently near 53.50. However, the daily chart indicates that gold closed Thursday below the critical short-term support of the 21-day Simple Moving Average (SMA) at $2,890. Traders remain risk-averse amid ongoing US tariff threats, which underpin the safe-haven US Dollar and drag the gold price lower.
Adding to the complexity of the current financial landscape, inflation is believed to have eased in February, particularly in France due to a marked reduction in regulated electricity prices. This development could provide some relief to markets, though traders remain cautious as they await further economic data. The US PCE inflation data is anticipated to offer a fresh trading impulse, potentially influencing gold's next moves.
The second estimate of the fourth-quarter US Gross Domestic Product (GDP) showed an annualized growth of 2.3% in Q4 2024. Meanwhile, the number of Americans filing for jobless benefits rose by 22,000 to 242,000 for the week ending February 22, reaching the highest level in three months. These figures reflect a mixed economic picture that continues to weigh on market sentiment.
US Treasury bond yields have been on a losing streak, adding pressure on the US Dollar and potentially providing some cushion for gold prices. The sell-off in US Treasury yields weighs heavily on market dynamics ahead of the release of the core Personal Consumption Expenditures (PCE) Price Index, which serves as the Federal Reserve's preferred measure of inflation. This data is expected to offer crucial insights into inflationary trends and could help trigger the next direction in gold prices.