Gold Trading Alert: US GDP "thunderstorm" and "feverish" inflation trigger stagflation fears; bulls target $5200.
2026-02-23 08:46:17
Gold prices rose for the fourth consecutive trading day in early Asian trading on Monday (February 23), currently trading around $5,145 per ounce, up about 0.95% on the day. The previous trading day saw a strong gain of over 1.3%, primarily driven by both a slowdown in US economic growth and the core personal consumption expenditures (PCE) price index breaking through the 3% mark. As the Federal Reserve's preferred inflation gauge, the rise in core PCE reignited market concerns about stagflation risks, thus significantly boosting safe-haven demand.
Newly released data shows that the annualized growth rate of US real GDP in the fourth quarter of 2025 slowed significantly to 1.4%, far below the previous value of 4.4% and significantly below market expectations. This economic slowdown was mainly attributed to the 43-day US government shutdown, which led to a sharp reduction in government spending, while exports and consumption also slowed to some extent. Although investment accelerated somewhat, overall growth momentum has clearly weakened.
In stark contrast to the slowing growth, inflationary pressures remain stubbornly persistent. The core PCE price index rose 3.0% year-on-year in December, a slight rebound from the previous month, and continues to remain above the Federal Reserve's long-term target of 2%. During the same period, the annualized PCE rate also rose to 2.9%. This series of data reinforces market expectations that the Federal Reserve will continue its tightening stance, further dimming the prospect of interest rate cuts in the near term. In addition, the University of Michigan consumer sentiment index slipped slightly to 56.6, with respondents generally reporting that "rising prices are eroding personal finances." However, the report also showed a glimmer of positive news: one-year inflation expectations fell from 4.0% to 3.4%, while five-year inflation expectations remained stable at 3.3%.
In a major legal development, the U.S. Supreme Court ruled on February 20 that the Trump administration's broad tariff measures, implemented under the International Emergency Economic Powers Act (IEEPA), exceeded presidential authority and were therefore invalid. This ruling was interpreted by the market as a significant limitation on executive power. As a result, the dollar index closed lower on Friday and continued to fluctuate downwards in early Asian trading on Monday, currently trading around 97.40, down approximately 0.4% on the day.
President Trump quickly responded to the ruling by expressing "disappointment," but emphasized that tariffs based on national security (Sections 232 and 301) would remain in place. He also announced an additional 10% global tariff under Section 122, as a supplement to existing rates. This statement reignited market concerns about a potential escalation of trade protectionism, boosting demand for safe-haven gold.
Money market expectations for a Federal Reserve rate cut before June 2026 have cooled significantly. Some investors are turning their attention to Kevin Warsh, Trump's nominee for Fed chair, who, if confirmed by Congress, may favor earlier or larger rate cuts. However, based on current futures market pricing, investors still generally expect the Fed to implement two 25-basis-point rate cuts this year.
Geopolitically, the situation in the Middle East continues to draw attention. Reports indicate that the US government is weighing options regarding Iran, including limited strikes or broader regime change, but diplomatic means remain the current priority.
On February 22, local time in the United States, a senior U.S. official revealed that if Iran submits a detailed draft nuclear agreement within the next 48 hours, U.S. negotiators are prepared to hold a new round of talks with Iran in Geneva on the 27th. The official stated that current diplomatic efforts may be the last chance President Trump is giving Iran before launching a large-scale U.S.-Israel joint military operation. The Trump administration is awaiting Iran's proposal.
According to Axios, South Carolina Republican Senator Lindsey Graham stated that several people close to President Trump advised him against bombing Iran, and Graham urged Trump to ignore their advice. As a senator closely associated with Trump, Graham is a leading figure in the Trump circle supporting a strike against Iran. He acknowledged understanding concerns about large-scale military action in the Middle East but believes those advising against involvement ignore the consequences of allowing unchecked forces of evil. Graham stated that after his recent visit to the region, he believes there is an opportunity to "bring about historic change" in Iran. However, he also noted the growing opposition to involvement and decisive action, and only time will tell how things will unfold.
Looking ahead to this week, the US economic data schedule is quite packed. Investors will focus on the ADP employment change (four-week moving average), weekly initial jobless claims, the January Producer Price Index (PPI), and public speeches by several Federal Reserve officials. In addition, unscheduled press conferences by President Trump could also introduce additional market volatility.
Overall, gold has benefited in the short term from safe-haven demand triggered by a slowing US economy, higher-than-expected US inflation, and instability in the Middle East. However, uncertainty surrounding the Federal Reserve's future path will continue to exert potential pressure on gold prices. The market is currently closely watching how these factors evolve to determine the next direction for gold prices.
The daily chart shows that the technical outlook for gold has turned neutral to bullish, but a break above the $5,200 level is needed to drive prices higher. Once that level is broken, the next resistance level will be $5,300, followed by the high of around $5,450 from January 30th.
On the downside, the psychological level of $5,000 provides key support. If this level is broken, gold prices may test the February 17th low of around $4,841, and then look towards the 50-day moving average (MA, 4,722.54).
The 14-day Relative Strength Index (RSI) is above the midline, supporting a short-term bullish bias; the MACD oscillator's histogram continues to narrow in the negative range, indicating that bearish pressure is easing.
(Spot gold daily chart, source: FX678)
At 8:28 Beijing time, spot gold is currently trading at $5,147.25 per ounce.
US economic data hits a snag: slowing growth meets stubborn inflation.
Newly released data shows that the annualized growth rate of US real GDP in the fourth quarter of 2025 slowed significantly to 1.4%, far below the previous value of 4.4% and significantly below market expectations. This economic slowdown was mainly attributed to the 43-day US government shutdown, which led to a sharp reduction in government spending, while exports and consumption also slowed to some extent. Although investment accelerated somewhat, overall growth momentum has clearly weakened.
In stark contrast to the slowing growth, inflationary pressures remain stubbornly persistent. The core PCE price index rose 3.0% year-on-year in December, a slight rebound from the previous month, and continues to remain above the Federal Reserve's long-term target of 2%. During the same period, the annualized PCE rate also rose to 2.9%. This series of data reinforces market expectations that the Federal Reserve will continue its tightening stance, further dimming the prospect of interest rate cuts in the near term. In addition, the University of Michigan consumer sentiment index slipped slightly to 56.6, with respondents generally reporting that "rising prices are eroding personal finances." However, the report also showed a glimmer of positive news: one-year inflation expectations fell from 4.0% to 3.4%, while five-year inflation expectations remained stable at 3.3%.
Supreme Court ruling on tariffs: Risk appetite briefly rebounds, dollar under downward pressure.
In a major legal development, the U.S. Supreme Court ruled on February 20 that the Trump administration's broad tariff measures, implemented under the International Emergency Economic Powers Act (IEEPA), exceeded presidential authority and were therefore invalid. This ruling was interpreted by the market as a significant limitation on executive power. As a result, the dollar index closed lower on Friday and continued to fluctuate downwards in early Asian trading on Monday, currently trading around 97.40, down approximately 0.4% on the day.
President Trump quickly responded to the ruling by expressing "disappointment," but emphasized that tariffs based on national security (Sections 232 and 301) would remain in place. He also announced an additional 10% global tariff under Section 122, as a supplement to existing rates. This statement reignited market concerns about a potential escalation of trade protectionism, boosting demand for safe-haven gold.
Monetary Policy Outlook: Expectations for Interest Rate Cuts Cool Down
Money market expectations for a Federal Reserve rate cut before June 2026 have cooled significantly. Some investors are turning their attention to Kevin Warsh, Trump's nominee for Fed chair, who, if confirmed by Congress, may favor earlier or larger rate cuts. However, based on current futures market pricing, investors still generally expect the Fed to implement two 25-basis-point rate cuts this year.
The turbulent situation in the Middle East continues to fuel safe-haven buying demand for gold.
Geopolitically, the situation in the Middle East continues to draw attention. Reports indicate that the US government is weighing options regarding Iran, including limited strikes or broader regime change, but diplomatic means remain the current priority.
On February 22, local time in the United States, a senior U.S. official revealed that if Iran submits a detailed draft nuclear agreement within the next 48 hours, U.S. negotiators are prepared to hold a new round of talks with Iran in Geneva on the 27th. The official stated that current diplomatic efforts may be the last chance President Trump is giving Iran before launching a large-scale U.S.-Israel joint military operation. The Trump administration is awaiting Iran's proposal.
According to Axios, South Carolina Republican Senator Lindsey Graham stated that several people close to President Trump advised him against bombing Iran, and Graham urged Trump to ignore their advice. As a senator closely associated with Trump, Graham is a leading figure in the Trump circle supporting a strike against Iran. He acknowledged understanding concerns about large-scale military action in the Middle East but believes those advising against involvement ignore the consequences of allowing unchecked forces of evil. Graham stated that after his recent visit to the region, he believes there is an opportunity to "bring about historic change" in Iran. However, he also noted the growing opposition to involvement and decisive action, and only time will tell how things will unfold.
This week's focus
Looking ahead to this week, the US economic data schedule is quite packed. Investors will focus on the ADP employment change (four-week moving average), weekly initial jobless claims, the January Producer Price Index (PPI), and public speeches by several Federal Reserve officials. In addition, unscheduled press conferences by President Trump could also introduce additional market volatility.
Overall, gold has benefited in the short term from safe-haven demand triggered by a slowing US economy, higher-than-expected US inflation, and instability in the Middle East. However, uncertainty surrounding the Federal Reserve's future path will continue to exert potential pressure on gold prices. The market is currently closely watching how these factors evolve to determine the next direction for gold prices.
Technical Outlook: Gold reclaims the $5,100 mark, next target $5,200.
The daily chart shows that the technical outlook for gold has turned neutral to bullish, but a break above the $5,200 level is needed to drive prices higher. Once that level is broken, the next resistance level will be $5,300, followed by the high of around $5,450 from January 30th.
On the downside, the psychological level of $5,000 provides key support. If this level is broken, gold prices may test the February 17th low of around $4,841, and then look towards the 50-day moving average (MA, 4,722.54).
The 14-day Relative Strength Index (RSI) is above the midline, supporting a short-term bullish bias; the MACD oscillator's histogram continues to narrow in the negative range, indicating that bearish pressure is easing.
(Spot gold daily chart, source: FX678)
At 8:28 Beijing time, spot gold is currently trading at $5,147.25 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
