Adding to the pressure, expectations that the Federal Reserve may delay interest rate cuts due to persistent inflation and strong consumer spending have further weighed on gold trading.
The Personal Consumption Expenditures (PCE) Price Index rose to 2.6% in December, while the core PCE stood at 2.8%, aligning with market expectations. Despite the near-term bearish outlook, markets still anticipate two rate cuts by the end of 2025, which could offer support to gold in the longer run.
Silver Struggles Below $31 Amid Inflation Concerns
Silver (XAG/USD) is also under pressure, trading at $30.92 after touching an intra-day low of $30.69. The metal mirrors gold’s decline, impacted by the robust U.S. Dollar and mounting inflation concerns. Bets on the Federal Reserve maintaining higher interest rates have dampened the appeal of non-yielding assets like silver.
However, silver may find support from global economic uncertainties. The ongoing risk-off sentiment, driven by fears of a global economic slowdown, could bolster safe-haven demand. Key support levels lie around $30.56, while resistance is seen near $31.26.
Global Economic Data Adds to Market Volatility
China’s Caixin Manufacturing PMI slipped to 50.1 in January from 50.5 in December, below expectations. While still indicating expansion, this slowdown signals weaker demand, raising concerns about the global economic outlook.
Meanwhile, U.S. Treasury Secretary Scott Bessent warned that tariffs could be inflationary, potentially strengthening the dollar further and exerting more pressure on precious metals.
Gold (XAU/USD) is trading at $2,781.31, down 0.54%, hovering right around its pivot point at $2,781.29—a level that could dictate the next move. Staying above this mark keeps the bullish case alive, with immediate resistance at $2,789.86. A break above that could push prices toward $2,800.18, a psychological level traders often watch.
On the flip side, if gold slips below $2,781.29, it may trigger a sharper decline toward support at $2,772.53, with $2,758.91 as the next downside target. The 50-EMA at $2,762.53 is providing some cushion, while the 200-EMA at $2,704.95 remains well below, signaling longer-term support.
For now, gold’s fate hinges on holding above that pivot—break it, and the trend could flip quickly.