Article by: ETO Markets

Gold prices (XAU/USD) have been struggling to maintain momentum, retreating to the lower end of the daily range despite modest gains in the Asian session, while still holding above the $3,100 level. The market is cautious, with overbought conditions on the daily chart and stable performance in Asian equity markets deterring fresh bullish bets ahead of US President Donald Trump’s impending reciprocal tariffs announcement. Uncertainty over Trump’s trade policies, coupled with the possibility of a tariff-driven US economic slowdown, is bolstering safe-haven demand for gold. This sentiment is further supported by recent US macro data indicating sticky inflation, slowing economic growth, and a decline in manufacturing activity—evidenced by the ISM Manufacturing PMI falling below 50—and a drop in job openings as per the JOLTS report. These factors have heightened expectations that the Federal Reserve may resume its rate-cutting cycle, a move that would weaken the US Dollar and further support gold prices, especially as upcoming economic reports on private-sector employment and Factory Orders could provide additional impetus during the early North American session. 

From a technical perspective, the overnight pullback from the all-time peak has stalled near the $… level, with the subsequent upward movement favoring bullish traders. However, the daily Relative Strength Index (RSI) remains well above 70, signaling overbought conditions and suggesting that a near-term consolidation or modest pullback might be wise before further positioning for gains. Despite this, the overall setup is constructive, indicating that the most likely trajectory for gold is to continue upward. The $… level serves as a crucial support point that may protect the immediate downside; however, a convincing break below this threshold could trigger long-unwinding, dragging the price down first to around $… and potentially further to the $…-… support zone, before testing lower support areas at approximately $…-… and eventually approaching the $… psychological level, which is expected to serve as a robust base for XAU/USD. On the upside, the price would face a strong resistance level $… as the all-year high and the psychological level.