Recent data from the World Gold Council indicates a remarkable surge in gold investment interest, particularly in North AmericaLast week alone, approximately 48 tons of gold flowed into gold exchange-traded funds (ETFs) listed in North America, a move that valued at an impressive $4.6 billionThis inflow marks the largest single-week gain seen since early AprilAnalysts have speculated that the growing investment demand could potentially drive gold prices up to $3,000 per ounce, which many consider to be an inevitable developmentMike McGlone, a senior commodity strategist with Bloomberg Intelligence, pointed out that as of February 20, the total known holdings in gold ETFs reached 84.2 million ounces, reviving to its highest level since the start of 2024. He forecasts a significant shift of funds towards gold ETFs by 2025, especially if the rapidly rising U.S. stock market and the prevailing high-interest rates exhibit any signs of reversalChris Mancini, the deputy portfolio manager of the Gabelli Gold Fund, noted that Western investors are rushing into ETFs as a hedge against the economic damages caused by tariffs and inflationary pressuresHe believes there remains substantial room for the demand for investment to grow even further.

In another development, a research report released by the San Francisco Federal Reserve on Monday revealed that investors and analysts are anticipating a robust and systematic response from the Federal Reserve to changes in inflation and the job marketThis report underscored the current financial market's heightened sensitivity to economic data emerging from the United StatesIn 2022, the Federal Reserve's responses to economic data became markedly more pronounced, initially prompted by inflation data, followed in the latter part of the year by labor market dataThis was analyzed based on professional forecasts and insights into the bond market trends presented in the latest Economic Letter from the regional Federal ReserveThese findings align with the Federal Reserve's actual responses to inflation; although inflation in the U.S. began to rise in 2021, it wasn't until 2022 that it compelled the Federal Reserve to raise interest rates

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Furthermore, this also corresponds with the Federal Reserve's reactions to job market data, which showed a notable weakening in the middle of last year, leading the Federal Reserve to decide to lower the policy interest rate by a full percentage point starting in September of the previous year.

Looking ahead, market participants are advised to keep their eyes peeled for several key indicators scheduled for release today, including the revised GDP growth rate for Germany in the fourth quarter, the CBI retail sales balance for February in the United Kingdom, and the Conference Board's Consumer Confidence Index for February in the United StatesThese reports are critical as they could influence financial markets significantly, especially amid growing concerns about inflation and employment.

The performance of gold against the U.S. dollar remains an essential discussion pointAs of February 28, international gold prices continued to reflect strength, with spot gold prices surging past $2,940 per ounce, setting a new historic recordUltimately, gold finished the day up 0.6%, closing at $2,938.40 per ounceThe main drivers propelling this upward trend include the U.S.'s announcement of a 25% tariff on European steel products, which escalated global trade tension indices to new highs since March 2024, thereby stimulating demand for safe-haven assetsThe holdings in gold ETFs concurrently surged, as exemplified by the SPDR Gold Trust holdings rising to 925.3 tons, the highest level recorded since July 2023, illustrating that institutional demand continues to warm upHowever, easing geopolitical tensions have somewhat restrained the extent of these gains, with the VIX volatility index retreating to 18.7. On a technical note, gold prices encountered resistance near the $2,950 mark, showcasing a 'shooting star' candlestick pattern on the daily chart, while the 14-day Relative Strength Index (RSI) indicated a continuous overbought signalDivergent strategies have emerged among analysts; Morgan Stanley maintains a target price of $2,800, suggesting limited transmission effects from tariffs, while UBS has raised its 12-month target to $3,000, citing substantial support from global central bank gold purchases (152 tons in January) and the inflow into ETFs.

In the realm of currency trading, the USD/JPY currency pair exhibited a technical rebound on February 28, climbing by 0.2% to 149.50, oscillating within a range of 149.00 to 149.80 throughout the day

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Factors supporting this currency pair include a surge in demand for short-covering, indicative of speculators trimming their net short positions on the dollar for the third consecutive week, as reported by the Commodity Futures Trading Commission (CFTC). The 149.00 level triggered technical buying, causing the exchange rate to momentarily spike to 149.85 due to stop-loss ordersAdditionally, the dollar index experienced a boost with a 0.4% rebound tied to the ISM Non-Manufacturing PMI rise, which formed a supporting linkageHowever, ongoing expectations surrounding the Bank of Japan's policy shift continue to suppress upward momentumThe market anticipates a 72% probability that adjustments to the Yield Curve Control (YCC) policy will occur in the upcoming March meeting, especially as the 10-year Japanese government bond yield breached the 0.75% policy cap, inciting a wave of unwinding in carry trades.

Technical analysis suggests that the dollar/yen pair is facing resistance near the 20-day moving average at around 149.80, while the daily MACD indicator shows a decreasing momentum with red bars shortening, indicating waning rebound strengthFurthermore, officials from Japan’s Ministry of Finance reiterated the significance of "exchange rate stability," hinting that intervention could be on the tableTraders should closely monitor the pressure at the 150.50 mark, as failure to breach this level may result in a continuation of range-bound movement with key support remaining at 148.50. Morgan Stanley has suggested that should the Bank of Japan signal a hawkish tilt next week, the dollar/yen pair could potentially test the mid-term target around 145.00.

Lastly, when examining the USD/CAD currency pair, trading has demonstrated some upward movement, extending to a seven-day high with the exchange rate hovering around 1.4250. Factors contributing to this movement include short-covering demands and technical buying pressure developing near the 1.4200 level

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