Gold prices are facing some intraday selling pressure after reaching a fresh all-time high during the Asian session. This comes as a positive risk tone is emerging in global markets, diminishing demand for gold, traditionally seen as a safe-haven asset. Additionally, a modest bounce in the US Dollar (USD) from its multi-year low is also weighing on the precious metal’s price. However, any significant corrective decline in gold appears unlikely due to ongoing uncertainty surrounding US President Donald Trump’s tariff policies, the US-China trade war, and concerns about a global recession.
Key Market Developments
Risk Sentiment: A positive risk tone in equity markets, particularly in the Asia-Pacific region, is contributing to a subdued demand for gold. Investors are moving toward riskier assets, undermining the appeal of gold.
USD Impact: A slight rebound in the US Dollar, following a multi-year low, is also curbing gold’s upside momentum. This is partly due to some traders positioning themselves in the dollar after a period of weakness.
US Economic Data: The US Census Bureau reported a robust 1.4% increase in Retail Sales for March, exceeding market expectations of a 1.3% rise and marking the strongest growth in over two years. This suggests a potential stabilization in the US economy, which could limit demand for gold as a safe-haven.
Fed Policy Outlook: Federal Reserve Chair Jerome Powell indicated that the Fed was not inclined to cut interest rates in the near term, citing potential inflationary pressures from aggressive tariffs. Despite this, market participants are still pricing in a possibility of rate cuts later in the year, which could cap the USD’s upside and continue to support gold.
Market Risks and Trade War Impact
US-China Trade Tensions: US-China trade relations remain strained, with the US imposing tariffs of up to 145% on Chinese goods and China retaliating with tariffs of 125%. This trade war is raising fears of a global economic slowdown, which continues to support the safe-haven demand for gold.
Ongoing Tariffs: The escalating trade war, especially with the introduction of new tariffs and restrictions on rare earths and AI technology, is increasing investor uncertainty. While equity markets are recovering in Asia, the long-term economic consequences of these tariffs continue to stoke fears of a recession.
Technical Outlook: From a technical perspective, gold remains in an uptrend, though the Relative Strength Index (RSI) is showing overbought conditions above 70. This suggests that gold may experience a period of consolidation or a modest pullback before extending its upward trajectory. The $3,300 level is a key support point for gold, and any corrective pullback toward this level could present buying opportunities for investors looking to enter fresh bullish positions.
Conclusion
While gold prices face short-term pressure from positive risk sentiment and a slight USD rebound, the ongoing US-China trade war, inflation concerns, and the possibility of rate cuts by the Federal Reserve are likely to prevent significant declines in gold’s value. Traders will be closely monitoring upcoming US economic data and Fed statements for short-term opportunities, with a constructive technical setup indicating potential support around $3,300 for the precious metal.
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