Article by: ETO Markets
Gold prices (XAU/USD) are navigating a period of consolidation, hovering around the critical $3,000 psychological threshold after a significant retracement from the all-time high of $3,167.68 achieved earlier in the month. The metal demonstrated resilience by attracting buyers near the $2,956 level, halting a sharp three-day decline. Persisting anxieties surrounding global trade dynamics, significantly amplified by the Trump administration's recently announced sweeping reciprocal tariffs, provide a strong undercurrent of support. These tariffs, including a proposed baseline 10% on all imports and substantially higher rates targeting specific nations like China (34%) and the EU (20%), along with a 25% levy on imported vehicles, have reignited fears of a full-blown global trade war, potentially choking global growth, disrupting supply chains, and increasing inflationary pressures – a backdrop that traditionally enhances gold's appeal as a safe-haven asset and an inflation hedge. Ongoing geopolitical tensions in various hotspots also contribute to this supportive environment. Furthermore, consistent demand from central banks seeking to diversify reserves away from the US Dollar offers a structural pillar of support. However, countervailing pressure stems from recent US economic indicators, notably the unexpectedly strong March Non-Farm Payrolls report, which surpassed expectations significantly. This robust data has led market participants to pare back bets on the number and timing of Federal Reserve interest rate cuts anticipated for 2025, providing a lift to the US Dollar. A stronger greenback typically acts as a headwind for gold, making it more expensive for buyers using other currencies. Market sentiment therefore remains delicately balanced and cautious, caught between the safe-haven demand driven by trade and geopolitical uncertainties and the dampening effect of potentially delayed Fed easing, leading to heightened volatility as traders await further cues from upcoming crucial data releases like the US Consumer Price Index and the FOMC meeting minutes.
From a technical perspective, Gold (XAU/USD) displays signs of short-term weakness following its sharp retracement from record highs. The price is currently trading around $…, notably below both the 10-day Simple Moving Average (SMA) at $… and the 20-day SMA at $…, indicating negative near-term momentum. The MACD indicator confirms this bearish sentiment, showing a recent crossover with the MACD line (33.00) positioned below its signal line (47.95) and a negative histogram (-14.95). While the Relative Strength Index (RSI 14) sits near neutral at 49.34, it reflects a significant cooling from previously overbought conditions. Immediate support was established at the recent low of $…. A more critical support zone exists near the confluence of the 50-day SMA ($…) and the lower Bollinger Band ($…). A convincing breach below this $…-$… area would strengthen the bearish case, potentially opening the path towards the $2,900 psychological level. Conversely, resistance is initially met near the 20-day SMA around $…, with a further hurdle near the 10-day SMA around $….
