Gold prices (XAU/USD) have gained traction for the second consecutive day, rising to the $2,915 mark during Tuesday’s Asian session. The increase in demand for the safe-haven asset is largely driven by ongoing concerns about potential global trade disruptions. US President Donald Trump’s threat of reciprocal tariffs has raised fears of a global trade war, bolstering interest in gold. Additionally, expectations that the Federal Reserve (Fed) will further cut interest rates in the coming months are further supporting the precious metal’s appeal.
However, a slight rebound in US Treasury bond yields and a modest recovery in the US Dollar from its lowest level since December 17 may limit gold’s upside potential. Furthermore, optimism regarding the delayed implementation of Trump’s tariff plans and ongoing peace talks over the Russia-Ukraine conflict may prevent significant further gains for gold.
Gold Unaffected by US Bond Yields and Modest Dollar Recovery
Trump’s recent statement on Friday regarding impending levies on automobiles, set to take effect by April 2, alongside his broader tariff agenda, has continued to fuel demand for gold as a safe-haven asset. The announcement comes amid a backdrop of weaker-than-expected US retail sales and mixed signals on inflation, which suggest the possibility of rate cuts from the Fed at its September or October meetings.
Fed officials have provided varying perspectives on future policy. Philadelphia Fed President Patrick Harker emphasized that the labor market is largely balanced, advocating for a steady policy in light of persistent inflation. Meanwhile, Michelle Bowman, a member of the Fed’s Board of Governors, noted that high asset prices may hinder inflation control and that more certainty is needed before considering rate cuts. In contrast, Christopher Waller highlighted slow progress on inflation and indicated that rate cuts might be appropriate in 2025, should inflation trends mirror those of 2024.
While the US Dollar has shown some recovery, snapping a three-day losing streak, the potential for further bullish momentum in gold appears restrained. Traders are now awaiting the release of the Empire State Manufacturing Index from the US, as well as speeches from influential Fed officials, which could provide short-term catalysts for USD demand.
Technical Outlook: Gold Prices Face Resistance Near $2,925
From a technical standpoint, gold has been confined to a range-bound pattern over the past week, which could be interpreted as a bullish consolidation following its recent rally to a record high. Oscillators on the daily chart remain in positive territory, suggesting the potential for further upside. However, the daily Relative Strength Index (RSI) is nearing overbought levels, indicating that any upward movement may face resistance at the $2,925 level, followed by a further barrier near $2,942–2,943, which marks the all-time high. A decisive break above these levels could signal a fresh breakout, extending gold’s two-month uptrend.
On the downside, a drop below $2,900 could encounter support in the $2,878–2,876 range. If the price falls further towards $2,860–2,855, this could present a buying opportunity, with strong support seen around $2,834. A break below this support could lead to further technical selling, potentially dragging gold towards the $2,815 region, with additional support levels at $2,800 and $2,785–2,784.
Conclusion
Gold prices are maintaining modest gains above $2,900, driven by global trade uncertainties and expectations of Fed rate cuts. However, potential resistance levels and the ongoing recovery in the US Dollar may limit further upside. Investors are advised to monitor key technical levels and upcoming economic data for potential market-moving developments.
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