Gold prices (XAU/USD) are struggling to sustain an intraday rebound from a nearly four-week low, hovering near the $2,972-$2,971 range touched earlier on Monday. Despite an initial bounce, gold is trading with modest losses as the European session approaches. This lack of momentum follows a report revealing that the People’s Bank of China (PBOC) increased its gold reserves for the fifth consecutive month. Meanwhile, persistent recession fears and heightened geopolitical risks continue to support demand for gold as a safe-haven asset.
In the US, the dollar (USD) has started the week on a weaker footing, driven by speculation that ongoing tariffs could lead to an economic slowdown, prompting the Federal Reserve (Fed) to resume its rate-cutting cycle sooner than expected. The prevailing risk-off sentiment has also pushed US Treasury yields lower, overshadowing the positive surprise in Friday’s US Nonfarm Payrolls (NFP) report and hawkish comments from Fed Chairman Jerome Powell. This environment further bolsters gold’s appeal as a non-yielding asset.
However, gold’s recovery has been limited by investor caution. There is a marked reluctance among traders to aggressively reposition in XAU/USD, as many continue to unwind bullish positions following a broader sell-off in global financial markets. As a result, there is a sense of uncertainty surrounding whether the recent sharp pullback from gold’s all-time peak has run its course, adding to the cautious outlook for any significant short-term upward movement.
Key Market Movers: Tariffs, Economic Concerns, and Gold’s Limited Appeal
The ongoing global trade conflict continues to fuel concerns about a potential economic recession, triggering an extended sell-off in equity markets worldwide. In response, traders have been liquidating long positions in gold to raise cash to cover losses in other assets.
In its March report, the People’s Bank of China (PBOC) added 0.09 million troy ounces to its gold reserves, marking its fifth consecutive month of purchases. This increase comes amid rising global trade tensions and geopolitical instability.
US President Donald Trump escalated the trade war last Wednesday by imposing reciprocal tariffs of at least 10% on all imported goods, with China facing additional levies of up to 54%. In retaliation, China’s Ministry of Commerce announced on Friday that it would impose tariffs of 34% on all US imports. US Commerce Secretary Howard Lutnick confirmed over the weekend that these tariffs would remain in place for an extended period, further complicating any potential resolution between the two countries. Trump has also stated that no deal will be reached with China unless the trade deficit is addressed.
Despite a better-than-expected US NFP report showing 228,000 jobs added in March, the US dollar has failed to capitalize on the data. The Fed is still expected to resume rate cuts, with the market pricing in at least four reductions this year. Meanwhile, Fed Chairman Jerome Powell noted that while inflation is nearing target levels, it remains slightly elevated. He also highlighted the inflationary impact of Trump’s tariffs, signaling that the Fed’s role is to prevent temporary price hikes from becoming persistent inflation.
This backdrop of weak dollar momentum and low bond yields continues to support gold’s modest bounce from its recent lows. However, the lack of follow-through in gold’s price movement underscores the challenges for bulls in the current market environment.
Technical Analysis: Gold Faces Key Resistance Near $3,055
From a technical standpoint, last week’s sharp retracement from the all-time high has stalled near the 61.8% Fibonacci retracement level of the February-April rally. The subsequent intraday bounce has faced resistance at the $3,055 level, which previously acted as support but now serves as a key resistance point. A break above this level could open the door for a move toward the $3,080 region, potentially paving the way for gold to test the $3,100 mark.
On the downside, the psychological $3,000 level, coinciding with the 50% Fibonacci retracement, is expected to provide support. If gold fails to hold above this level, it could decline toward the $2,972-$2,971 area, which marks the recent multi-week low. Further losses could push gold toward the 50-day Simple Moving Average (SMA) near $2,946. A decisive break below this level could shift the near-term bias toward bearish sentiment, increasing the likelihood of further downside.
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
