Gold Faces Weekly Decline as Stronger US Dollar Weighs, but Geopolitical Risks Cushion Losses

Gold Slides on Fed Policy Caution, But Geopolitical Uncertainty Caps Losse

The price of gold (XAU/USD) declined by 0.61% on Friday as US inflation data met market expectations, reinforcing the Federal Reserve’s (Fed) stance against a more dovish monetary policy.

Persistent economic uncertainty, fueled by trade tariffs and geopolitical risks, drove the US Dollar Index (DXY) higher, exerting downward pressure on gold prices.

“The primary driver of the gold and silver markets right now is profit-taking amid week-long liquidation and the strength of the US Dollar Index,” said Jim Wyckoff, senior market analyst at Kitco Metals.

Adding to gold’s bearish momentum, Wall Street’s major stock indices continued their slide as investors remained wary of inflationary pressures stemming from US President Donald Trump’s trade policies. Despite registering its first weekly loss since December 2024, gold posted its second consecutive monthly gain, largely supported by concerns over Trump’s tariff plans.

In early Asian and European trading, XAU/USD attempted a recovery. The key market event today is the US ISM Manufacturing Purchasing Managers’ Index (PMI), scheduled for release at 3:00 p.m. UTC. A weaker-than-expected reading—below the projected 50.6—could force the Fed to reconsider its monetary policy stance, potentially triggering a rally in XAU/USD. Conversely, a stronger reading may reduce the likelihood of further rate cuts, pushing gold prices lower.

“Spot gold may test resistance at $2,879 per ounce; a decisive break could pave the way toward the $2,894–$2,909 range,” said Reuters analyst Wang Tao.

Euro Struggles as Dovish ECB and Stronger USD Weigh on Sentiment

The euro (EUR/USD) slid 0.21% on Friday against the surging US dollar, pressured by geopolitical tensions and ongoing economic uncertainty linked to Trump’s trade tariffs.

Recent optimism surrounding a potential Russia-Ukraine peace settlement has supported the euro. However, this sentiment took a hit after a tense meeting between Ukrainian President Volodymyr Zelenskiy and US President Donald Trump at the White House.

“We appeared to be making progress toward a ceasefire, but now that seems to be on hold, adding another layer of uncertainty,” said Jack McIntyre, portfolio manager at Brandywine Global.

Despite months of declines from its September 2024 peak, the euro showed signs of stabilization on hopes for a diplomatic resolution. However, the latest developments have dampened those expectations.

Fundamentally, EUR/USD remains under bearish pressure as investors anticipate the European Central Bank (ECB) to maintain a more dovish stance compared to the Fed. While the Fed has signaled a steady rate outlook, ECB policymakers have hinted at potential rate cuts, citing restrictive monetary conditions in the eurozone.

During early Asian and European trading, EUR/USD attempted a modest recovery. Today’s focal point is the eurozone Consumer Price Index (CPI) at 10:00 a.m. UTC, followed by the US ISM Manufacturing PMI at 3:00 p.m. UTC—both events could inject volatility into the pair. A breakout above 1.04800 would indicate bullish momentum, while a breakdown below 1.03595 could expose fresh multi-week lows.

Canadian Dollar Awaits Trade Tariff Decision Amid Strong GDP Data

The Canadian dollar (USD/CAD) edged down 0.19% against the US dollar on Friday as investors assessed strong domestic economic data and braced for potential US trade tariffs.

While USD/CAD remained relatively stable on the day, it recorded a significant 1.69% weekly gain as traders priced in the likelihood of additional US tariffs. Canada’s Q4 GDP expanded by 2.6% annually—well above the expected 1.8%—driven by robust consumer spending. However, strong US inflation data and the looming trade tariff threat supported USD/CAD’s slight uptick.

Meanwhile, Canadian officials are set to meet with US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer to negotiate an exemption from the proposed 25% tariffs. Canada is emphasizing its efforts to curb the flow of fentanyl opioids into the US, hoping to persuade the Trump administration before the March 4 deadline.

“If the US moves forward with 25% tariffs, it would significantly impact Canada’s economy, though the economic fallout in the US would also be notable,” said Shaun Osborne, chief currency strategist at Scotiabank.

Should the Trump administration revoke the tariffs, USD/CAD could see a sharp decline. The pair remained largely unchanged during Asian and early European trading, with today’s primary focus on the US ISM Manufacturing PMI at 3:00 p.m. UTC. A weaker PMI print could stall USD/CAD’s rally, targeting 1.44170, while a stronger figure may drive the pair toward 1.44700.

AI-Driven Stock Picks: What’s the Next Big Winner?

Artificial intelligence is reshaping the stock market, and Investing.com’s ProPicks AI has been at the forefront of identifying high-performing stocks. In 2024 alone, ProPicks AI flagged two stocks that surged over 150%, four that gained more than 30%, and three more that climbed at least 25%.

With AI-powered analytics, you can uncover the next breakout stock before the market catches on. Stay ahead of the curve and discover the best stock for your next trade.

This version enhances readability, improves flow, and adds a sharper focus on key market dynamics. Let me know if you’d like any refinements! 🚀