Gold plunges 3% weekly as trade policies recession fears fuel USD rally.
Gold prices dropped more than 1% on Friday and have fallen over 3% this week. The US Dollar rose to its highest level in ten days, at 107.66, driven by concerns about US trade policies and economic data suggesting a possible recession. XAU/USD is trading at $2,845 after reaching a daily high of $2,885.
US President Donald Trump announced that 25% tariffs on Mexican and Canadian products will start next week on March 4. The Federal Reserve’s preferred inflation measure, the Core Personal Consumption Expenditures (PCE) Price Index, showed that inflation is moving closer to the Fed’s 2% goal.
Expectations for the Federal Reserve (Fed) to lower interest rates are growing. This year, a 70 basis point cut, starting in June, is projected.
The Atlanta Fed’s Fed’s GDPNow estimate for Q1 2025 predicts the economy will shrink from 2.3% growth to -1.5%. Following this news, the 10-year US Treasury note yield fell by three basis points, and the US Dollar (USD) strengthened due to recession concerns.
Cleveland Fed official Beth Hammack noted that a rate hike is unlikely and that the impact of trade policies on the economy is still unclear.
XAU/USD technical outlook: Gold extends losses beneath $2,850
Gold prices have dropped significantly, showing that traders are taking profits before the weekend and adjusting their portfolios at the end of the month. When XAU/USD fell below $2,900, it continued down to $2,832. However, if it closes above $2,850, buyers could still be optimistic about rising prices.
If prices increase, the first resistance level for XAU/USD will be $2,900, followed by the year-to-date high of $2,956. If prices fall, the first support level will be $2,800, followed by the daily peak of $2,790 from October 31 and the 50-day Simple Moving Average (SMA) at $2,770.
Bitcoin Weekly Update: BTC continues to drop, now nearly 30% lower than its highest point.
Bitcoin’s (BTC) price is falling; as of Friday, it was below $80,000. This week, it dropped over 15%, wiping out $660 billion from the crypto market’s total value and leading to $3.68 billion in liquidations. Additionally, information about US Bitcoin spot Exchange Traded Funds (ETFs) showed a total net outflow of $2.48 billion until Thursday, suggesting institutional investors are losing confidence.
The Bybit hack caused a decline in Bitcoin prices.
Bitcoin’s price fell more than 18% this week, dropping from Monday’s high of $96,500 to Friday’s low of $78,258. This is the most significant weekly decline in three years. Bitcoin has corrected nearly 30% from its all-time high of $109,588 on January 20.
The main reason for this drop was news about a hack on the Bybit cryptocurrency exchange, where $1.4 billion in funds were stolen. This hack is the largest in crypto history, surpassing the PolyNetwork hack of $611 million in August 2021. The Bybit hack reduced market confidence and wiped out $660 billion from the overall cryptocurrency market’s value since the incident, as shown in the accompanying graph.
According to CryptoQuant data, Bybit lost about $2 billion in Bitcoin (BTC) due to a security issue. From Friday to Tuesday, investors withdrew 20,190 BTC from Bybit’s reserves, returning to levels not seen since early March 2024. This happened mainly because the exchange did not stop withdrawals after the ETH hack, and investors felt uncertain about the market.
US President Donald Trump has canceled the signing ceremony with Ukraine.
A meeting on Friday between United States President Donald Trump and Ukrainian President Volodymyr Zelenskyy turned into an argument. President Zelenskyy said that the terms of the deal are either unclear or missing essential parts, but he still thinks it is a good first step. President Trump believed the deal was complete and thought President Zelenskyy was just there to finalize it. He became furious during the meeting, calling the Ukrainian President “disrespectful.”
Ukrainian President Volodymyr Zelenskyy opted to reject US President Donald Trump’s “rare earth deal” with Ukraine, sparking an irate tirade from President Trump and Vice President JD Vance in the White House on Friday.
President Zelenskyy recognized that the defense pact had unclear terms regarding access to rare minerals in Ukraine. He pointed out that the deal was poorly written and didn’t specify how the US would protect Ukraine’s borders or end Russia’s invasion.
In response, President Trump had an outburst and canceled his planned signing ceremony with Zelenskyy. A White House official said Trump felt disrespected by Zelenskyy’s words and behavior but noted that the Ukrainian team could still return to reschedule the signing.
With a better defense offer already available from the European Union in exchange for access to Ukraine’s rare earth resources, Ukraine is not likely to agree to US demands.
Trump’s ‘World War III’ warning to Zelensky rattled stocks. Why they quickly recovered.
US stocks mostly ignored a heated discussion on Friday between PresiUS Donald Trump and Ukrainian President Volodymyr Zelensky in the Oval Office. During the meeting, Trump warned that Ukraine was risking “World War III.”
After a slight stock dip and a brief increase in Wall Street’s “fear gauge,” US stocks finished the day sharply higher. Keith Lerner, co-chief investment officer at Truist Advisory Services, said investors viewed the exchange as more “theater” from Trump and remained hopeful that a peace deal between Ukraine and Russia could still happen.
President Trump and President Zelenskyy had a tense talk that caused the stock market to drop for a while. Investors got worried when Trump mentioned “World War III,” which caused significant market changes. But soon after, the markets returned because people thought it was just political drama and not a real problem. Experts say that while global issues are concerning, investors mostly care about what central banks do and the state of the economy.
Conclusion:
This week had important financial and political events. Gold and Bitcoin dropped sharply due to economic concerns and security issues. The US Dollar got more substantial as worries about a recession increased. Tensions between the US and Ukraine slowed down diplomatic talks. Although the market was initially nervous, Wall Street showed strength, reflecting some optimism among investors despite the uncertainty. The next few weeks will be necessary for shaping market trends and political events as the global economy changes.
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