Gold tumbles below $2,900 amid US recession fears, profit-taking

• Gold retreats as investors take profits amid fears of US stagflation.
• Atlanta Fed GDPNow forecasts Q1 2025 contraction at -2.4%, the first negative print since COVID-19.
• The US Dollar Index (DXY) recovers to 103.99, capping Gold's upside.
• Traders eye US CPI data on Wednesday for Fed rate-cut expectations.

Gold (XAU) price retreats as the week begins, down 0.70% and falls below the $2,900 figure as investors' fears of a recession in the United States (US) grow amid controversial trade policies implemented by the US President Donald Trump. At the time of writing, the XAU/USD pair trades at $2,890 after hitting a daily high of $2,918.

Wall Street continued to edge lower, depicting a dismal market sentiment due to the ongoing economic slowdown. On Friday, Trump appeared in an interview and said, "There is a period of transition, because what we're doing is very big. ...We're bringing wealth back to America. ...That's a big thing, and there are always periods; it takes a little time."

In the meantime, Gold traders booked profits amid concerns that the US economy is facing the challenges of a stagflationary scenario. Recent data suggests the economy is slowing down sharply. The Atlanta Fed GDP Now model predicts the first quarter of 2025 at -2.4%, which would be the first negative print since the COVID-19 pandemic.

The Greenback, which was trading with losses, has recovered some ground according to the US Dollar Index (DXY). The DXY is up 0.09% at 103.99, shy of reclaiming the 104.00 mark.

Economic concerns are spreading globally after China's inflation in February came at -0.7% YoY, well below the -0.5% estimated by economists. Worries are increasing that the economy might slow down.

Given the backdrop, traders would be eyeing the release of inflation data in the US. A hot inflation report could weigh on expectations of further easing by the Federal Reserve (Fed) and might prevent the US central bank from cutting interest rates at upcoming meetings.

This week, the US economic docket will feature Tuesday's JOLTs Job Openings data, followed by the Consumer Price Index (CPI) release on Wednesday.

Daily digest market movers: Gold price retreats amid falling US yields

• The US 10-year Treasury bond yield dropped nearly nine basis points to 4.218% as traders eye the Fed's interest rate cuts.
• US real yields, as measured by the US 10-year Treasury Inflation-Protected Securities (TIPS) yield that correlates inversely to Gold prices, edge down five-and-a-half basis points to 1.906%, a tailwind for the non-yielding metal.
• Recently, Fed Chair Jerome Powell reiterated that the central bank is not in a hurry to lower rates. Powell added that getting inflation to 2% would be bumpy and that the central bank doesn't need to overreact to one or two readings. Powell said the Fed is well-positioned regarding monetary policy.
• The New York Fed Consumer Sentiment Survey revealed that inflation expectations for one year in February increased from 3% to 3.1%. For the three and five-year periods, they remained unchanged at 3%. Americans expect price increases in gas, rent and food.
• The latest US jobs report for February was mixed, with the economy adding over 150K people to the workforce, but the Unemployment Rate rose by 4.1%. Nevertheless, the data shows that the labor market remains solid.
• The People's Bank of China (PBoC) continues to purchase Gold, according to the World Gold Council (WGC). The PBoC increased its holdings by 10 tonnes in the first two months of 2025. However, the largest buyer was the National Bank of Poland (NBP), which increased its reserve by 29 tonnes, its largest purchase since June 2019, when it bought 95 tonnes.
• Money market traders had priced in 80 basis points of easing in 2025, up from 74 bps last Friday, via data from Prime Market Terminal.

XAU/USD technical outlook: Gold price drops, sellers eye $2,900

Gold price fell to a five-week low of $2,880 earlier on the day, with momentum about to turn bearish, with the Relative Strength Index (RSI) poised to cross below the 50-neutral threshold.

If XAU/USD closes daily below $2,900, sellers could be in charge and target the $2,850 figure. A breach of the latter will expose the February 28 low of $2,832, followed by the $2,800 mark.

Conversely, if Gold ends above $2,900, the next resistance would be $2,950, followed by the record high at $2,954. A breach of the latter would expose the $3,000 mark.