Fed Tarif reductions and dollar weakness support the rise in Gold Gold
Despite a small recovery, the US Dollar Index (DXY) remains under pressure near 103.50 after weaker economic data. Retail sales in February rose by only 0.2%, which missed the expected 0.7%, which signaled the softer consumer expenditure.
In the meantime, the Consumer Sentiment Index from the University of Michigan fell to 57.9, the lowest since November 2022, so that concern about economic delay was fueled.
The FOMC decision on Wednesday is the primary focus of the market. Although an immediate rate reduction is unlikely, traders expect multiple decreases later in 2025, which would support the upward momentum of Gold by reducing the alternative costs of retaining non-revenue assets.
Geopolitical uncertainty stimulates the demand for safe haven
Worldwide trade and geopolitical risks continue to shape the Gold process. The shifts of American trade policy, in particular the rate of 25% on Australian aluminum and steel, have contributed to economic problems. In the meantime, constant negotiations of Russia-Ukraine and broader political uncertainty contribute to the resilience of Gold as a store of value.
Despite the Bullish Trend of Gold, the economic rebound of China can be tempered further profit. With a growth of 4.0% on an annual basis in the retail trade and rising industrial output, improved economic conditions can limit the immediate upward momentum.
Investors are now waiting for US economic data releases, including building permits, start of homes and industrial production, to measure market direction in the short term. However, the policy position of the FED remains the most important factor that influences Gold’s movement in the coming weeks.