Gold prices continue their downward trajectory, retreating from a record high of $3,500. The precious metal fell for the second consecutive day on Wednesday, edging closer to the $3,300 mark as safe-haven demand recedes.
Recent developments have supported the pullback in gold. The Trump administration has indicated a potential de-escalation in the US-China tariff dispute, sparking optimism about a possible trade deal. Additionally, President Donald Trump’s decision to backtrack on his threats to dismiss Federal Reserve (Fed) Chair Jerome Powell has eased concerns about US monetary policy. These factors, alongside a decline in geopolitical tensions, have helped boost investor confidence, weighing on gold prices.
In contrast, the US Dollar (USD) has struggled to recover from a multi-year low, reflecting weakening confidence in the US economy and growing expectations of more aggressive Fed policy easing. This dynamic could still provide some support for gold in the near term, despite the recent decline in its price.
US Equity Markets Surge Amid Trade Optimism
US equity indices saw significant gains on Tuesday following Trump’s remarks that he had no intention of firing Fed Chair Powell before the expiration of his term in May 2026. Optimism over US-China trade talks also contributed to the rally, with investors pulling back from safe-haven assets like gold. US Treasury Secretary Scott Bessent suggested that the tariff war between the two nations might soon de-escalate, and White House spokeswoman Karoline Leavitt affirmed that the administration is preparing for a trade deal.
On the geopolitical front, Russian President Vladimir Putin expressed a positive outlook on peace initiatives, while Ukrainian President Volodymyr Zelenskyy signaled willingness to engage in talks following a ceasefire.
Despite these positive developments, Trump’s shifting stance on trade and his unpredictable policy decisions have undermined investor confidence in the US economy. This has kept pressure on the US Dollar, preventing it from maintaining gains, and supported gold prices.
Federal Reserve Easing Expectations and Global Economic Concerns
Market expectations for the Fed to resume its rate-cutting cycle in June, along with the potential for at least three rate cuts by year’s end, are likely to benefit gold. Investors are also awaiting the release of global flash PMIs for additional insights into global economic conditions, which could further shape risk sentiment and influence the direction of gold prices.
Technical Analysis: Gold Price Near Key Support Levels
From a technical standpoint, gold has found some stability below the 23.6% Fibonacci retracement level of its recent price surge. While there are initial signs of possible bullish exhaustion, oscillators on the daily chart remain in positive territory, suggesting that further caution is needed before making aggressive bearish bets. A dip below the $3,315 mark could find support near the 38.2% Fibonacci level, around $3,289. However, a decisive break below this level could signal further downward momentum.
On the upside, the $3,370 level (23.6% Fibonacci retracement) remains a key resistance point, with a potential rally towards the $3,400 mark. A sustained move beyond $3,424 could signal renewed bullish momentum, paving the way for an attempt to surpass the $3,500 psychological threshold. Such a breakout could extend the strong uptrend that has characterized gold’s performance over the past few months.
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