As the new week begins, risk assets appear to be stabilizing, with US Treasury Secretary Scott Bessent offering reassurance to investors, noting that equity corrections are normal and can be beneficial. However, gold prices remain firm, reflecting ongoing concerns in the market over geopolitical developments, weak retail sales data, and the looming universal tariff deadline on April 2. Additionally, the Federal Reserve’s upcoming meeting this week is expected to contribute to consolidative price action in the gold market, as traders await any signs of policy changes.
Acceptance Above the $3,000 Mark Is Crucial for Gold
Gold prices briefly breached the psychological $3,000 mark last week, before pulling back slightly. This retracement could be attributed to profit-taking, as traders are wary of a deeper correction. Historically, each time gold has broken a significant whole number level—such as $2,700 or $2,800—there has been a pullback. The $3,000 level is an even more critical milestone, and it’s understandable that market participants might be cautious given the Fed meeting scheduled for this week.
Despite the pullback, the bullish trend for gold remains intact, with the price still showing resilience above key support levels. This dip may present an opportunity for bullish investors to enter the market, as the long-term outlook remains positive, driven by factors such as geopolitical risks, inflation concerns, and the ongoing demand for safe-haven assets.
Gold’s performance against other safe-haven assets, including the Swiss Franc, Japanese Yen, US Dollar, and US 10-Year Treasury bonds, suggests that gold continues to hold its ground. While a pullback may be possible, it is likely to be viewed as a buying opportunity for those looking to capitalize on the ongoing rally.
Gold ETF Flows and Central Bank Buying Surge
In recent months, gold exchange-traded funds (ETFs) have seen a significant uptick in inflows, with gold surpassing Bitcoin as a preferred investment. Over the past three months, Bitcoin prices have dropped by approximately 19%, while gold has risen by about 12%. In the week ending March 14, gold ETFs saw inflows of $1.16 billion, even as gold touched the $3,000 per ounce level.
This increase in ETF holdings is notable, with gold ETF holdings rising by about 3.88 million ounces this year, reaching nearly 86.7 million ounces, the highest level since October 2023. February saw the largest monthly increase in holdings since March 2022. If this trend continues, it is likely to support gold prices in the coming months, especially as current holdings remain below the peak seen in 2020.
Central bank demand for gold has also surged since the onset of the Russia-Ukraine conflict in 2022, with annual gold purchases doubling from 500 to over 1,000 metric tonnes. In 2023, central banks bought 1,045 tonnes of gold, accounting for about 20% of global demand. Leading buyers included Poland, India, and Turkey, with concerns over sanctions and shifts in currency reserve strategies driving this trend.
Following Donald Trump’s election in November 2024, Comex gold inventories surged by over 120% due to tariff fears and price differences that made gold a more attractive investment. Inventories now stand at 40 million ounces, the highest level since 1992, although the pace of inflows has slowed recently.
Technical Outlook: Navigating Resistance and Support Levels
From a technical analysis standpoint, gold’s price remains difficult to predict due to the lack of historical data for the $3,000 mark. However, significant psychological price levels like $1,000, $2,000, and now $3,000 often present challenges for market participants to achieve and sustain acceptance. For instance, it took buyers a year and a half to establish a sustained trend above $1,000, and the $2,000 level required 3.5 years to break, even with the Federal Reserve’s aggressive monetary policies during the COVID-19 period.
At present, gold’s price remains volatile, with a pullback from the $3,000 mark followed by a retest. Immediate support levels are identified at $2,994 and $2,982, with a potential further decline toward the $2,950 level if these supports are broken. On the upside, the recent all-time high will likely serve as a point of resistance, followed by further levels at $3,025 and $3,050.
A sustained price hold above the $3,000 mark would provide more clarity on potential resistance levels and help confirm whether the rally can continue or if the market will consolidate further.
Conclusion
As gold prices hover around the $3,000 per ounce level, the market continues to face uncertainty stemming from geopolitical risks, weak economic data, and the upcoming Fed meeting. Despite these concerns, gold remains well-supported by strong demand from central banks and ETFs, as well as the ongoing shift towards safe-haven assets.
Traders should closely monitor the price action around the $3,000 level, as a sustained move above this point could signal further bullish momentum. Conversely, a drop below key support levels may suggest a temporary consolidation or pullback before a resumption of the uptrend.
Overall, the outlook for gold remains positive, with key factors such as central bank buying, ETF inflows, and economic uncertainty continuing to support the price of the precious metal in the coming months.
Related topics：
- What is the Value of 18K Gold?
- Why Does Gold Price Increase During War?
- What is the Best Price Being Paid for Gold Sovereigns?
