Gold (XAU/USD) is slipping below the $2,900 mark at the start of the week, facing selling pressure on Monday as market volatility intensifies ahead of the US trading session. Investors are reacting to comments from former US President Donald Trump in a weekend interview with Fox News. Addressing the state of the economy, Trump described it as being in a “transition” phase, while market sentiment increasingly leans toward concerns of a potential recession.
Meanwhile, Federal Reserve (Fed) Chairman Jerome Powell spoke on Friday before the Fed entered its blackout period ahead of the upcoming policy rate decision on March 19. Markets widely anticipate the central bank will maintain current rates. Powell emphasized that no immediate action is necessary, arguing that holding rates steady carries minimal risk compared to the potential consequences of adjusting policy prematurely.
Daily Market Digest: Fed Holds Steady
US Economic Outlook & Fed Policy
Former US President Donald Trump stated that the economy is undergoing a “period of transition,” as he continues to push for tariffs and federal job cuts, according to Bloomberg.
Meanwhile, Federal Reserve Chair Jerome Powell acknowledged rising economic uncertainties but emphasized that there is no urgency for a policy shift. The Atlanta Fed’s GDP tracker indicates that the US economy may contract this quarter. Historically, lower borrowing costs tend to support gold prices, as noted by Reuters.
According to the CME FedWatch Tool, there is a 97.0% probability that the Fed will maintain its current policy stance at the March 19 meeting. The likelihood of a rate cut by June 18 has now risen to 81.8%.
Technical Analysis: Will the Transition Last Longer?
Markets appear poised for a pullback after extended moves, including in bullion. A retracement in gold prices could be healthy, especially if Trump refrains from announcing additional tariffs, reducing market anxiety. If that happens, gold may dip toward the S2 support level near $2,878, presenting an entry opportunity for bulls ahead of potential reciprocal tariffs next month.
At the time of writing, gold is trading around $2,905. Key resistance levels to watch include the daily Pivot Point at $2,912 and R1 at $2,927. If bullish momentum continues, R2 at $2,945 could serve as a cap before testing the all-time high of $2,956 from February 24.
On the downside, the psychological $2,900 level and S1 support at $2,893 form a crucial support zone. A breakdown below this area could open the door for further declines toward S2 at $2,878, which may act as a strong cushion against additional selling pressure.
