Gold (XAU/USD) maintains a mild positive bias above the $2,900 mark during Tuesday’s Asian session but lacks strong bullish momentum, remaining within its recent trading range. Uncertainty over U.S. trade policy and expectations of Federal Reserve rate cuts provide support, while a rebound in Treasury yields and a stronger U.S. dollar limit further gains.
Trade War Fears and Fed Rate Cut Bets Support Gold
Investor concerns over U.S. President Donald Trump’s threat of reciprocal tariffs continue to drive safe-haven demand for gold. His latest warning, including potential auto tariffs as early as April 2, has fueled fears of a global trade war, underpinning the metal’s appeal.
Meanwhile, weaker U.S. retail sales data and mixed inflation signals have strengthened expectations that the Federal Reserve may cut rates later in the year, with Fed Funds Futures pricing in a 40-basis-point reduction in 2025. However, Fed officials remain cautious. Philadelphia Fed President Patrick Harker emphasized data-driven policy decisions, while Governor Michelle Bowman noted that high asset prices might slow inflation progress. Governor Christopher Waller, however, signaled that rate cuts could be appropriate if inflation follows 2024’s trend.
Gold Faces Key Technical Levels
From a technical standpoint, gold’s consolidation phase suggests a bullish bias following its recent record highs. Momentum indicators remain positive, though the Relative Strength Index (RSI) is near overbought levels, indicating possible resistance ahead.
Immediate resistance lies at $2,925, with a breakout targeting the all-time high of $2,942-$2,943. A decisive move above this zone could extend gold’s two-month rally.
On the downside, support is seen at $2,878-$2,876, with further buying interest expected around $2,860-$2,855. A deeper decline could test $2,834, and a break below this level may accelerate losses toward $2,815, $2,800, and ultimately $2,785-$2,784.
Market Focus on Economic Data and Fed Speeches
Traders are watching the Empire State Manufacturing Index release and speeches from key Federal Open Market Committee (FOMC) members for further market direction. While gold’s long-term outlook remains bullish, near-term movement will depend on U.S. economic signals and the strength of the dollar.
