Gold’s price (XAU/USD) is currently around $2,910, following a 1.3% decline the prior day due to concerns over US consumer confidence and tariff threats. US yields have dropped, with a projected 25 basis points rate cut expected in June from the Federal Reserve.

Tariffs on Mexico and Canada are due to be enacted on March 4, while the Fed’s preferred inflation measure, the Personal Consumption Expenditures Price Index, will be released soon. Weak US data has raised hopes for a Fed interest rate cut, influencing gold demand.

Currently, gold trades below the daily Pivot Point, with potential downside risks. The Relative Strength Index suggests a possible drop to $2,880 if market conditions worsen. For recovery, the daily Pivot Point at $2,918 and resistance at $2,948 are key levels.

Interest rates impact currency strength and are set by central banks to maintain price stability, often targeting a 2% inflation rate. Higher rates typically strengthen a currency and lower gold prices due to increased opportunity costs associated with holding gold versus interest-bearing assets.

The Fed funds rate influences lending between banks and shapes market behaviour ahead of Federal Reserve decisions.

We’re witnessing some bumps in the road for gold prices, and it’s not just about the numbers. The retreat to around $2,910 followed an earlier decline, largely driven by renewed worries surrounding US consumer confidence and trade barriers. With Treasury yields also slipping, expectations have grown for a 25-basis-point rate cut from the Federal Reserve in June.

At the same time, upcoming trade restrictions with Mexico and Canada threaten to stir market volatility. On top of that, we have the core inflation data due soon—something traders will be watching closely. Disappointing economic numbers from the US have fuelled speculation that policymakers may move towards rate cuts sooner rather than later. That has a direct effect on gold, since lower interest rates make non-yielding assets more appealing.

From a technical standpoint, the metal hovers below the daily Pivot Point, leaving room for further declines if sentiment deteriorates. Sitting on the horizon is the $2,880 level, which looms as a possible target should momentum remain bearish. For those looking towards recovery, movement beyond $2,918 could indicate strength, with the next hurdle standing at $2,948.

When it comes to interest rates, they serve as a major force in shaping currency movements. Central banks set borrowing costs to keep inflation steady, generally aiming for around 2%. When rates climb, a currency becomes stronger, making gold less attractive due to the added cost of holding it. In contrast, when rates fall, gold tends to gain appeal.

The Federal Reserve’s benchmark lending rate plays an essential role in the financial system, influencing everything from interbank lending to broader market expectations. As we move through the coming weeks, market positioning will continue to be dictated by shifting rate expectations and how the latest economic data plays into them.