Daily Price Outlook
Gold (XAU/USD) prices experienced a mild retreat after reaching a fresh all-time high earlier this week, trading with a slight negative bias around the $3,220 level during the first half of the European session.
This pullback can be attributed to profit-taking, as markets adopt a more risk-on sentiment and global equity markets show strength.
Despite the dip, the broader market outlook suggests that strong downside remains unlikely, particularly as global uncertainties continue to underpin demand for the safe-haven asset.
Gold Price Supported by Escalating US-China Trade Tensions
However, the recent retreat in gold prices comes amid heightened risk sentiment, but any notable declines are expected to be limited. This is largely due to escalating US-China trade tensions, which are expected to continue to act as a tailwind for gold.
Last Friday, China increased tariffs on US imports to 125%, responding to President Donald Trump’s decision to raise tariffs on Chinese goods to 145%. These developments have sparked further fears of a slowdown in global economic growth, which could lift gold prices back to their all-time highs.
Investors are keenly watching these trade dynamics, as the continued friction between the world’s two largest economies presents a strong case for holding gold as a safe-haven asset.
Fed Rate Cut Expectations and Weak US Dollar Keep Gold Supported
Investor sentiment has also been influenced by expectations that the Federal Reserve will soon resume its rate-cutting cycle.
Meanwhile, the recent US economic data, including weaker-than-expected inflation figures, have fueled speculation that the Fed may lower borrowing costs at least three times this year.
The sharp decline in US Treasury yields and the continued weakness of the US Dollar, which is hovering near its lowest level since April 2022, have provided further support to gold.
This outlook for easing monetary policy comes amid concerns over a slowdown in the US economy due to tariff-driven disruptions.
Gold, being a non-yielding asset, benefits from a weaker dollar and lower interest rates, and these factors are likely to keep downward pressure on gold prices at bay.
On the data front, the latest US Consumer Price Index (CPI) report for March showed a 0.1% monthly decline and a decrease in the yearly inflation rate to 2.4%, further fueling expectations that the Fed may pivot towards more dovish monetary policies.
Inflation Concerns and Safe-Haven Demand Provide a Strong Floor for Gold
Another factor supporting gold's rise is the expectation that tariffs will cause higher inflation in the coming months. As a result, gold is seen as a safe bet against rising prices, which helps maintain strong demand for the metal.
With the market expecting the Fed to cut rates by 90 basis points by the end of 2025, gold is likely to keep appreciating in the near future.
This week, investors are paying close attention to statements from key Federal Reserve officials, including Fed Chair Jerome Powell on Wednesday, as these comments could shed light on future rate cuts.
Additionally, the US Retail Sales data, set for release later this week, could drive demand for the US Dollar and influence gold's price.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is extending its bullish momentum, currently hovering near the $3,232 level after decisively breaking past the $3,206 pivot. The uptrend remains firmly intact, supported by strong price action and a 50 SMA rising below current levels at $3,096.
The market is now testing resistance at $3,255.39, a key Fib extension level, with upside potential toward $3,298.43 if buyers maintain control.
However, RSI at 70.82 signals overbought conditions, suggesting the rally could stall or consolidate before pushing higher. If the price fails to clear $3,255, we could see a retest of $3,206 or deeper toward $3,167, which now serves as a key downside risk level.
Gold remains bullish above the $3,206 breakout point. A sustained close above this level keeps the upside bias toward $3,283 and $3,298, with caution warranted as RSI stretches into overbought territory.
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