Gold Price Forecast: XAU/USD down but not out ahead of US PMI data

Gold price is on a corrective move lower from near record highs of $2,955 set on Thursday. Despite the pullback, Gold price remains on track to book the eighth consecutive weekly gain.

Gold price eyes eighth weekly rise and US PMI data

The latest leg down in Gold price could be attributed to profit-taking as traders reposition ahead of the first critical economic data release from the United States (US) this week – the S&P Global Preliminary business PMIs.

The data could help markets refocus on the US Federal Reserve’s (Fed) outlook on interest rate cuts after the Minutes of the January policy meeting failed to alter their expectations of two rate reductions this year.  

The Minutes backed the Fed cautious stance on Wednesday as it showed that “many participants noted that the committee could hold the policy rate at a restrictive level if the economy remained strong and inflation remained elevated” in the face of Trump’s trade policies.

Persistent expectations that the Fed will likely deliver two rate cuts in 2025 continue to underpin the sentiment around the non-yielding Gold price.

That said, any adverse reaction to the strong PMI data on Gold price could be short-lived if fresh developments surrounding US President Donald Trump’s tariff plans hit the wires and strengthen the safe-haven demand for the traditional store of value – Gold.

The recent tariff talks by Trump and geopolitical tensions around Russia-Ukraine peace deal have supported the record rally in Gold price.

However, the bright metal could extend its correction from lifetime highs if traders cash in on their longs ahead of next week’s US Personal Consumption Expenditures (PCE) inflation data release.

All in all, any dip in Gold price will likely be seen as a good buying opportunity in the near term.

Gold price technical analysis: Daily chart

Gold price turns lower after failing to find acceptance above the $2,950 psychological mark on a daily candlestick closing basis.

But the 14-day Relative Strength Index (RSI) returns to the bullish zone, currently near 69.75, suggesting a ‘buy-the-dips’ trade in the Gold price.

A sustained break above the $2,950 barrier could resume the record rally. The next relevant resistances are seen at $2,970 and the $3,000 key figure.

Conversely, a fresh pullback could call for a test of the $2,900 round level, below which the February 14 low of $2,877 will be threatened.

A firm break of that level will initiate a fresh downside toward the $2,850 psychological barrier.