Traders weigh geopolitical risks and add pressure on gold

Gold prices began the week moderately higher, remaining above the three-week low. The asset is supported by expectations of two interest rate cuts by the Federal Reserve (Fed) by the end of the year. However, this is a long-term factor and is already priced in.

Geopolitical risks and the possible consequences of US President Donald Trump's trade policy are also driving growth. On March 4th, tariffs will be introduced on goods from Canada and Mexico, and a 10% tariff on Chinese imports will be doubled. This adds to trade tensions.

On the macroeconomic front, the US personal consumption expenditures (PCE) price index rose 0.3% in January. The annualized inflation rate slowed to 2.5% from 2.6% the previous month. The core PCE fell to an annualized 2.6%. This reinforces expectations of monetary easing in the US. However, the strengthening of the dollar over the past three days is limiting gold's upside potential.

Today, traders will be focusing on the US Manufacturing PMI. The key event of the week will be the Nonfarm Payrolls (NFP) report, which may affect the short-term dynamics of the dollar and gold.

From a technical point of view, gold prices are forming a downtrend on the H1 timeframe after exiting the uptrend on the four-hour (H4) timeframe. The upside potential in the coming days may be limited by the channel resistance. The Relative Strength Index (RSI) is approaching the oversold territory. This may signal a possible reversal within the current descending channel. The optimal entry point for selling is near the channel resistance around the 2880.00 level.

Signal:

Short-term prospects for GOLD suggest selling. 

The target is at the level of 2785.00.

Part of the profit should be taken near the level of 2835.00.

A stop-loss could be placed at the level of 2925.00.

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