Gold prices were largely unchanged during early Asian trading on Tuesday, as market activity remained subdued due to the Lunar New Year holiday observed across many Asian markets and a U.S. public holiday on Monday. Spot gold hovered near the $5,000 level, following a 1% decline in the previous session that saw it close just below that threshold at $4,992. The U.S. Dollar Index, which measures the greenback's performance, was flat after a 0.1% gain in the prior session.
UBS analyst Giovanni Staunovo noted, "With reduced liquidity due to holidays, gold is expected to trade in a range around $5,000 per ounce this week."
Recent U.S. economic data has created further divergence in market expectations regarding the Federal Reserve's interest rate path. While January's consumer price inflation came in lower than anticipated, employment growth for the same month unexpectedly accelerated.
Simultaneously, Chicago Fed President Austan Goolsbee struck a hawkish tone, suggesting last Friday that while interest rate cuts are possible, services sector inflation remains elevated. Market participants widely expect the Fed to maintain current rates at its next meeting on March 18.
In late January, a wave of speculative buying pushed the multi-year rally to a critical point, driving gold to record highs above $5,595. This was followed by an abrupt two-day sell-off early in the month that brought prices down to around $4,400, though gold has since recovered approximately half of those losses.
Several major banks, including BNP Paribas, Deutsche Bank, and Goldman Sachs, anticipate gold will resume its upward trajectory. They cite ongoing geopolitical tensions, market skepticism about Federal Reserve independence, and a broader trend of diversification away from currencies and sovereign bonds as key drivers.
Jefferies analysts, led by Fahad Tariq, reiterated their positive outlook on gold, pointing to two major macro supports: inflation and U.S. dollar depreciation. The firm raised its 2026 gold price forecast from $4,200 to $5,000, stating that investors and central banks concerned about these factors have "virtually only one option: hard assets."
On the geopolitical front, reports emerged Sunday that Iran is seeking a nuclear agreement with the United States that would yield economic benefits for both parties. The Financial Times reported that Iran has initiated naval exercises amid heightened tensions with the U.S. The Iranian Revolutionary Guard conducted drills in the Strait of Hormuz, coinciding with the eve of scheduled talks between Tehran and Washington.
Zain Vawda, MarketPulse Analyst at OANDA, commented, "I would lower my medium-term target for gold from $5,500 to closer to the $5,100-$5,200 range, but the current situation remains highly fluid."
This week features a packed U.S. economic calendar, including durable goods orders, housing data, speeches from several Fed officials, and the release of FOMC meeting minutes. Market attention will subsequently shift to initial jobless claims, the second estimate of Q4 2025 GDP, and the Fed's preferred inflation gauge, the core PCE price index.
From a technical perspective, gold has formed lower highs for three consecutive sessions following the February 11 peak of $5,119, indicating weakening bullish momentum. This suggests sellers are actively defending the $5,100 level, putting downward pressure on prices.
The Relative Strength Index (RSI) also signals that bulls are retreating. A close below $5,000 on Monday could open the door for further declines. The first key support level lies near the 20-day moving average, followed by the $4,900 mark. A break below $4,900 would target $4,800, with the next demand zone around the 50-day moving average at $4,634.
Conversely, if gold closes above $5,000, initial resistance is seen at $5,050, followed by the February 11 high of $5,119.