Fundamental and technical signals point to gold pullback

Gold prices had a positive start to the week, staying close to the all-time high of $2,886.77 reached last Friday. Growing demand for the safe-haven asset amid escalating trade tensions was the main support factor. US President Donald Trump announced his plans to impose 25% duties on steel and aluminum imports. This raised fears of a global trade standoff.

Gold receives additional support from the expected acceleration of inflation due to the US protectionist policy. However, stabilizing non-farm payrolls (NFP) figures released on Friday may deter the Federal Reserve (Fed) from further monetary policy easing.

The US economy created 143,000 jobs in January instead of the expected 170,000, but the unemployment rate dropped suddenly to 4.0%. Fed officials are keeping a restrained approach to rate cuts. As Minneapolis Fed President Neel Kashkari said, the regulator is ready to act when inflation data improves. In turn, Adriana Kugler noted slow progress in achieving the 2% level of consumer prices.

A moderately strong dollar remains a restraining factor for gold. Investors are waiting for Fed Chairman Jerome Powell's speech in Congress and US inflation data. These events may determine the further dynamics in the precious metal market.

From a technical perspective, gold prices are showing a strong uptrend on the H6 timeframe. However, the growth potential may slow down. Divergence of the Relative Strength Index (RSI) signals a reversal, possibly within the current ascending channel. The price correction from the current highs is necessary to attract new buyers.

Signal:

The short-term outlook for GOLD suggests selling. 

The target is at the level of 2,815.00.

Part of the profit should be taken near the level of 2,850.00.

A stop-loss could be placed at the level of 2,925.00.

The bearish trend is short-term, so a trading volume should not exceed 2% of your balance.