Gold prices (XAU/USD) faltered on Tuesday during the Asian session, failing to sustain the previous day’s climb toward the $2,900 mark. The precious metal’s recovery from a three-week low, reached last Friday, was stalled as renewed U.S. trade tariff concerns and a stronger U.S. Dollar (USD) weighed on investor sentiment.
Market jitters stemmed from U.S. President Donald Trump’s latest tariffs on imports from Mexico, Canada, and China, sparking fears of inflationary pressures that could compel the Federal Reserve to maintain higher interest rates for longer. The non-yielding nature of gold makes it less attractive in a high-rate environment, contributing to the bearish sentiment.
Trade Tensions and Global Risk Appetite
Trump’s 25% tariffs on imports from Mexico and Canada took effect on Tuesday, alongside a 10% levy on select Chinese goods. The U.S. president also announced reciprocal tariffs set to begin on April 2 for countries imposing duties on American products.
In response, Canada’s Prime Minister’s Office confirmed plans for retaliatory tariffs on U.S. goods, while China’s Commerce Ministry pledged countermeasures to protect its economic interests. The escalating trade disputes heightened concerns of a global trade war, tempering risk appetite across financial markets.
While weaker equity markets often bolster gold’s safe-haven appeal, the metal struggled to attract significant buying interest. The uncertainty surrounding geopolitical tensions, particularly the U.S. decision to pause military aid to Ukraine, added another layer of risk but failed to drive substantial demand for bullion.
Technical Outlook and Market Sentiment
From a technical standpoint, gold’s inability to break above the $2,900 threshold casts doubt on bullish momentum. However, daily chart oscillators remain in positive territory, suggesting potential dip-buying opportunities near the $2,860 support zone. A break below this level could see prices fall toward the $2,833-$2,832 region, with the $2,800 psychological mark as the next downside target.
On the upside, sustained strength above $2,900 would be required to trigger fresh bullish bets, potentially lifting gold prices toward the $2,934 resistance and the record high of $2,956 touched last Monday.
Outlook and Key Events Ahead
Investors are likely to remain cautious ahead of the U.S. Nonfarm Payrolls (NFP) report on Friday, a key economic indicator that could significantly influence the Federal Reserve’s monetary policy outlook and the U.S. Dollar. Any signs of weakening labor market conditions could boost gold’s appeal as a safe-haven asset.
Despite headwinds from the stronger dollar and higher rates, lingering geopolitical risks and the threat of a global trade war may provide underlying support for gold in the near term.
