Gold prices showed positive momentum following a dip to $3,000 last week, driven by a decline in real yields and rising inflation expectations. The U.S. dollar, despite rebounding from a strong support level at 103.50, remains weak, making gold more attractive as an investment. The weakening dollar, coupled with falling yields, lowers the opportunity cost of holding gold, supporting its appeal as a safe-haven asset.
U.S. consumer confidence dropped sharply in March, falling from 100.1 to 92.9, marking its lowest point in over four years. This sharp decline, which missed expectations, highlights growing concerns about a potential recession. These fears have contributed to a stagflation narrative, where inflation remains high even as economic growth slows. Responses from the Conference Board survey pointed to rising concerns over trade policies and tariffs, further fueling inflation expectations and increasing demand for safe-haven assets.
Federal Reserve officials have also contributed to the bullish outlook for gold. Governor Adriana Kugler noted that goods inflation is reaccelerating in some sectors, while New York Fed President John Williams acknowledged increased uncertainty among businesses and households. On Monday, Atlanta Fed President Raphael Bostic projected only one rate cut in 2024 and warned that inflation may not reach the Fed’s target until 2027. Despite this, markets are pricing in 64.5 basis points of easing in 2025, indicating continued uncertainty and further supporting gold as a hedge against long-term inflation.
Inflation Fears Grow Amid Trade Wars and Geopolitical Tensions
Inflation has been a consistent feature of fiat currency systems, but its pace and causes have evolved over time. Since the U.S. abandoned the gold standard in 1971, inflation has been decoupled from hard assets, allowing the dollar’s value to decline steadily. This long-term erosion of purchasing power has illustrated how inflation can silently devalue wealth, especially when structural checks like the gold standard are no longer in place.
Despite occasional periods of deflation, such as during the global financial crisis in 2009, inflation remains the dominant trend. The inflation rate fluctuates based on various factors, including money supply growth, energy prices, wage trends, and external shocks. Globalization has been one of the most significant deflationary forces in recent decades, especially after China joined the WTO in 2000. Cheap imports from China, driven by low wages and industrial subsidies, helped suppress global inflation.
However, that deflationary pressure is reversing. Trade wars, tariffs, and rising geopolitical risks are disrupting global supply chains. The shift toward economic self-reliance and national security priorities is leading to higher production costs. U.S. tariffs on key trading partners are already sparking fears of price increases, contributing fresh inflationary pressures. Without the gold standard to anchor the dollar, inflation has become not just a possibility but a persistent risk.
Gold and Silver Technical Analysis
Gold Daily Chart – Resistance Ahead
Gold prices have rebounded from the $3,000 support level, showing positive momentum. A break above $3,055 will maintain the uptrend and could trigger a rally toward the $3,200 level.
Gold 4-Hour Chart – Building Positive Price Action
The 4-hour chart shows gold maintaining positive momentum above $3,000, with two failed attempts to break below this level. As long as prices remain above $3,000, further gains are likely.
Silver Daily Chart – Bullish Momentum
Silver prices reversed higher on Tuesday, maintaining a strong bullish trend. Positive price action above the key $32.50 level suggests a potential move toward $35. The 50 and 200-day simple moving averages (SMAs) are trending higher, reinforcing silver’s bullish outlook.
Silver 4-Hour Chart – Ascending Broadening Wedge
On the 4-hour chart, silver formed a rounding cup pattern after reversing from $32.80. This suggests building momentum toward the $35 target, with the price movement fitting within an ascending broadening wedge pattern.
US Dollar Technical Analysis
US Dollar Daily Chart – Rebound from Support
The U.S. Dollar Index has rebounded from the 103.50 support level, showing positive price action toward 105.20. However, the overall trend remains negative, and the index is likely to move lower once the market stabilizes.
US Dollar 4-Hour Chart – Divergence
The dollar’s rebound reflects positive price development, with a double bottom and divergence on the 4-hour chart. However, the index remains within a descending channel, facing strong resistance at 105.20.
Related topics:
- India Surpasses China in Gold Purchases, Buying 51% More in Three Months
- Qilu Bank Enhances Support for Small Businesses with Innovative Financial Tools
- Bitcoin Poised for a Surge Amid Gold’s Delivery Delays, Expert Claims
