Gold prices (XAU/USD) are flat and just a few steps away from a new record high, currently at $2,800.93, with some profit-taking taking place. On the geopolitical front, markets were shaken by comments from US President Donald Trump confirming 25% tariffs will be imposed on Canada and Mexico, two of the US's largest trading partners, starting Saturday, and threatening to impose 100% tariffs on BRICS countries if they try to replace the US Dollar with a new currency in international trade. This should be a headwind for Bullion as it could lead to trade wars and inflation fears with prices soaring for US consumers and producers.

On the economic data front, inflation will be in the spotlight, with the release of the US Personal Consumption Expenditures (PCE) Price Index for December, the Federal Reserve's preferred inflation gauge, due later today. Overall, the figures are expected to come in flat or slightly higher.

After surging higher on Friday morning, hitting a new all-time high of $2,800.93, the question is whether bullion will not face substantial profit-taking. Tariffs are always considered inflationary, which is a headwind for the precious metal. If US data comes out higher than expected later in the day, inflation concerns will trigger more selling pressure, and gold may soon move lower in search of support.

The first support is quite far away, at $2,721, the triple top of November, December, and January, which was broken on January 21. Just below that, $2,709 (October 23, 2024 low) is in focus as the second closest support. If both of the above levels break, expect a drop back to $2,680 with major selling.

Analysts and strategists have been pricing in $3,000, but $2,800 looks like a good starting point for the next upside resistance. Based on Thursday's price action, technical analysis (pivots) shows $2,809 and $2,824 as important daily resistance levels.(AL)

Source: FXstreet