Gold Reversal Likely if Fed Keeps Interest Rates Higher

Published 11/02/2025, 11:00
Updated 11/02/2025, 11:34

Upon analyzing the movements of the gold futures, I anticipate that the gold futures look ready to take a sharp reversal after hitting the day’s high at $2968.39.

Despite this sudden surge in gold prices amid growing concerns over the duration of the global tariff trade war since the inaugural of US President Donald Trump, who looks to change the global economic equations according to his agenda.

Undoubtedly, recent steps taken by Donald Trump by imposing reciprocal tariffs on many countries have raised the pace of uncertainty to a greater extent, resulting in safe heaven’s demand among investors.

For a long time, most of the central banks have been purchasing gold for their reserves to maintain an expected surge in fiscal deficits.

But this has pushed the gold prices to an extent that could raise the inflation manifold, even to hit the levels which are evident enough to surge the recessionary fear all over the world.

On the other hand, the Federal Reserve is likely to postpone additional interest rate cuts until the next quarter, largely due to concerns about inflation rising as a result of recent tariff policies.

Amid such a scenario, I anticipate that the gold futures have tested the final peak from where a selling spree could start this week.

Gold Futures Daily Chart

I anticipate that the traders should wait for the inflation data before taking a short position in gold with a stop loss at $3006 with a target of $2702 up to Mar. 12, 2025.

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Disclaimer:
Readers are advised to take any position in gold at their own risk, as this analysis is based only on obervations.

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