Gold prices edged lower on Thursday as a stronger U.S. dollar dampened demand for the precious metal, with investors turning their attention to Donald Trump’s upcoming Congressional address for potential policy signals. The shift in sentiment saw gold retreat from recent highs, as the greenback regained ground amid speculation over future economic and trade policies.
The U.S. dollar’s strength was driven by renewed expectations that the Federal Reserve may maintain its tight monetary policy for longer. With recent economic data supporting a cautious approach to rate cuts, traders have increased their bets on a higher-for-longer rate environment, which typically weighs on non-yielding assets like gold.
Despite the pullback, safe-haven demand for gold remains intact, as uncertainty surrounding global trade and fiscal policy continues to loom. Investors are closely watching Trump’s remarks for any hints of potential tariff adjustments or economic measures that could impact markets. If concerns over trade tensions resurface, gold could see renewed buying interest.
Gold US Dollar 1-D Chart as of March 05, 2025 (Source: TradingView)
Meanwhile, Treasury yields have also played a key role in limiting gold’s upside. Higher yields make interest-bearing assets more attractive compared to gold, prompting some investors to shift away from the precious metal. However, any dovish signals from the Fed or unexpected policy shifts from Trump could reverse this trend, providing support for gold prices.
From a technical standpoint, analysts see key support near $2,850, with a deeper pullback potentially testing lower levels if dollar strength persists. On the upside, a break above $2,900 could signal a return to bullish momentum, especially if risk sentiment worsens.
For now, gold remains at the mercy of macroeconomic developments and political uncertainty, with traders awaiting Trump’s address for clarity on the future policy landscape. Any major surprises could lead to increased volatility, keeping gold firmly on investors’ radar in the sessions ahead.
