Article by: ETO Markets
Gold prices are experiencing a significant pullback as global markets react to the implementation of the United States' reciprocal tariff plan. After touching a fresh record high recently, the precious metal has dropped sharply today, trading around $3,115, as traders take profits amidst the market uncertainty sparked by the trade measures. The immediate catalyst for the sell-off appears to be the tariff enactment, overshadowing gold's traditional safe-haven appeal in a "sell the fact" dynamic. Bearish pressure also stems from the potential for this sharp profit-taking to gather pace, especially given the rapid ascent in recent sessions. However, fundamental support remains underpinned by persistent geopolitical tensions in various global hotspots, continued purchasing by central banks looking to diversify reserves, and the overarching expectation of eventual interest rate cuts by the US Federal Reserve, which typically weakens the US Dollar and lowers the opportunity cost of holding gold. Market sentiment has clearly shifted towards caution, with volatility increasing as participants weigh the potential fallout from the tariffs against these underlying supportive factors.
From a technical perspective, Gold (XAU/USD) shows signs of a deepening correction after hitting resistance and retreating from the record peak of $…. The sharp decline has pushed the price below near-term exponential moving averages, currently testing support around the $… mark. The immediate downside target is the daily low near $…. A decisive break below this level could intensify selling pressure, potentially targeting the next significant support zone around the 10-day Simple Moving Average at $…, followed by a more critical support cluster formed by the 21-day Exponential Moving Average ($…) and the 20-day Simple Moving Average ($…). While the Relative Strength Index (RSI 14) has eased to 71.19 from higher levels, indicating a reduction in immediate overbought pressure, it still suggests potential for further downside before reaching more neutral territory, reinforcing the short-term bearish outlook.
