Gold prices are currently rebounding from one-month lows of $2,957 observed early on Tuesday, closely mirroring movements seen in Monday’s Asian session. The price of gold has reclaimed the $3,000 threshold, but questions remain about whether this rally will hold, given the ongoing escalation in US-China trade tensions.
Global Trade Developments Impacting Gold Prices
Gold is bouncing back after a three-day correction, as the US Dollar (USD) faces renewed selling pressure. Meanwhile, US Treasury bond yields have paused their recent rebound from six-month lows.
China’s efforts to boost lending to stabilize its markets, combined with a broader recovery in risk sentiment, have weighed on the US Dollar. In turn, this has provided support for gold. Gold also finds additional backing from growing concerns over the escalating trade war between the US and China.
On Tuesday, China’s Commerce Ministry strongly opposed any additional 50% tariffs, warning that it would respond with countermeasures if the US presses forward with further tariffs. This comes in the wake of US President Donald Trump’s Monday threat to impose a new 50% tariff, in addition to the existing 10% across-the-board tariffs and a 34% “reciprocal” tariff, which is set to take effect on Wednesday, April 9.
Furthermore, expectations are rising that the US Federal Reserve (Fed) may resume its interest rate-cutting cycle in May, with analysts now predicting five rate cuts in 2025. This has led to renewed downward pressure on both the dollar and US Treasury bond yields. Goldman Sachs has raised its forecast for Fed rate cuts, now predicting a total of 130 basis points (bps) in 2025, up from the previous projection of 105 bps.
If the global market recovery continues, further weakness in the Greenback could support a sustained recovery in gold prices.
Concerns Over Fresh Developments in Trade War
Despite the recovery, gold buyers remain cautious, as fresh developments in global trade policies continue to weigh on market sentiment. The European Union (EU) is preparing to impose retaliatory tariffs on US imports after talks failed to yield an agreement.
Additionally, China’s likely refusal to withdraw its recently imposed 34% tariffs could reignite risk aversion across global markets, fueling demand for gold as a safe-haven asset.
Gold Price Technical Analysis: Daily Chart
From a technical perspective, the gold market appears to be under some bearish pressure, despite the recent upswing. The 14-day Relative Strength Index (RSI) closed below the 50 level on Monday, indicating that bearish forces are still present, although the current RSI stands at 48.50, suggesting some stabilization.
Gold buyers will remain hopeful as long as the 50-day Simple Moving Average (SMA) at $2,947 is defended. A break below this level would weaken the near-term bullish outlook, potentially pushing gold toward the $2,900 level. Further downside support can be found around the March 10 and 11 lows at $2,880, followed by the 100-day SMA at $2,805.
On the other hand, for the current upswing to gain traction, gold must close above the 21-day SMA at $3,022. A daily close above this level would signal a resumption of the bullish trend, with the next targets being the $3,050 psychological resistance and, potentially, $3,100.
Conclusion
Gold prices have shown resilience, rebounding from recent lows as concerns over the US-China trade war and expectations of rate cuts by the Fed weigh on the US Dollar. However, the sustainability of this rally remains uncertain, as fresh trade developments and market volatility could influence the outlook. Buyers will need to watch key technical levels closely to gauge whether the recovery will continue or if gold will face further bearish pressures.
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