Gold (XAU/USD) prices attracted some sellers following an intraday rally that re-approached all-time highs and traded in neutral territory heading into the European session on Tuesday (February 4). However, the declines remained muted amid concerns about the potential economic impact of US President Donald Trump's trade tariffs, which may continue to underpin the safe-haven bullion. Moreover, expectations that Trump's protectionist policies will lead to higher US inflation could further benefit the precious metal's status as a hedge against rising prices.

Meanwhile, Trump's decision to temporarily suspend tariffs on Mexico and Canada, after reaching a border security deal with the two countries, boosted investor confidence. The risk-on flow, coupled with the Federal Reserve's (Fed) hawkish pause last week, provided a slight lift in the US Treasury bond yields. This, in turn, helped the US Dollar (USD) regain some positive traction after the previous day's U-turn from over two-year highs and held investors from placing fresh bets on Gold prices amid slightly overbought conditions.

From a technical perspective, the Relative Strength Index (RSI) is already flashing slightly overbought conditions on the daily chart. This makes it prudent to wait for some near-term consolidation or a modest pullback before the next leg up. That said, any corrective slide below the immediate support of $2,800 might still be seen as a buying opportunity and remain limited near the $2,773-2,772 horizontal resistance breakout point. However, some follow-through selling could pave the way for a further decline towards the $2,755 zone en-route the $2,725-2,720 region and the $2,700 mark.

On the flip side, investors are likely to take some breather near the $2,830 area, or the record top touched on Monday. However, some follow-through buying would be the precursor to an extension of the well-established trend witnessed from December swing lows, around the $2,583 region.Newsmaker

Source: FXstreet