Gold prices continued their downward slide on Monday, falling by more than 2% to settle at $2,971 per ounce, the lowest level since mid-March. The drop comes as investors seek refuge in the US Dollar amid escalating concerns over global economic instability fueled by trade tensions and potential recession fears.
The resurgence of the US Dollar, or “King Dollar,” follows a recent dip to a six-month low. This reversal began after US President Donald Trump announced reciprocal tariffs on Wednesday. In response, China imposed a 34% tariff on all imports from the US on Friday, igniting turmoil in global financial markets and driving most major equity indices into the red.
Further complicating the situation, White House economic advisor Kevin Hassett suggested that the government might approve a 90-day pause in tariff increases, contingent on Trump’s approval. However, the Trump administration later dismissed the statement as “fake news,” according to CNBC.
In addition to tariff tensions, rising US Treasury yields have added pressure on gold prices. The yield on the 10-year US Treasury note increased by nearly 15 basis points to 4.147%, while the US Dollar Index (DXY), which tracks the Dollar against a basket of six major currencies, rose by 0.39%, reaching 103.29.
Looking ahead, market participants will focus on key US economic data this week, including the Federal Open Market Committee (FOMC) meeting minutes, which will be released on Wednesday, as well as consumer and producer inflation figures.
Market Movers and Economic Indicators
US real yields have surged, with the yield on 10-year Treasury Inflation-Protected Securities (TIPS) rising 14 basis points to 1.967%. The Consumer Price Index (CPI) for March is expected to decline slightly, from 2.8% to 2.6% year-over-year, with Core CPI also projected to decrease from 3.1% to 3%.
Fed Governor Adriana Kugler recently highlighted the impact of tariffs and supply shortages on inflation forecasts, warning that new tariffs could drive further price increases.
Concerns about a potential recession have been amplified by an inversion in the US 10-year to 3-month yield curve, with the 3-month yield now paying 27 basis points more than the 10-year yield.
Gold Price Outlook
As of the latest market data, gold prices are continuing their downward trajectory, dipping below the $3,000 mark. The Relative Strength Index (RSI) has turned bearish, suggesting that gold may continue to consolidate near the 50-day Simple Moving Average (SMA) of $2,942 to $3,000. A further decline beneath this level could see prices testing the $2,900 mark, with the 100-day SMA at $2,801 offering additional support.
On the other hand, if buyers manage to push gold back above the $3,000 threshold, the next target would be the $3,050 level.
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