Gold prices (XAU/USD) have been under pressure for the third consecutive day, maintaining a negative bias despite holding firmly above the $3,000 psychological level, or Friday’s swing low. The decline comes as concerns surrounding the impact of U.S. President Donald Trump’s trade tariffs on the global economy begin to ease. Reports suggest that the Trump administration’s planned reciprocal tariffs will be narrower and less stringent than initially feared, which has boosted investor confidence in riskier assets and undermined gold’s safe-haven appeal.
Although market speculation about the Federal Reserve (Fed) resuming its rate-cutting cycle soon—amid concerns about a tariff-induced slowdown in the U.S. economy—has kept the U.S. Dollar from fully capitalizing on its recent bounce from a multi-month low, it hasn’t been enough to ignite significant movement in the gold market. Geopolitical risks persist, preventing traders from placing aggressive bearish bets on the non-yielding metal, which limits its losses ahead of the upcoming global PMI data. Attention will shift later in the week to the U.S. Personal Consumption Expenditure (PCE) Price Index.
Gold Faces Pressure from Receding Safe-Haven Demand
Over the weekend, reports surfaced that President Trump is planning a more targeted approach to his reciprocal tariffs, set to take effect on April 2. This development has encouraged investors to move toward riskier assets, further weakening gold’s appeal as a safe-haven investment at the start of the week.
Meanwhile, U.S. officials have engaged in peace talks with Ukrainian representatives, while a meeting with Russian officials is scheduled for Monday. These diplomatic efforts, coupled with the Trump-Putin agreement for a 30-day pause on Russian strikes against Ukrainian energy infrastructure, have contributed to easing geopolitical tensions.
The U.S. Dollar remained steady near a one-and-a-half-week high on the back of the Fed’s less dovish outlook. The central bank’s forecast to implement two 25 basis point rate cuts by the end of 2023 has placed additional downward pressure on gold. Fed Chair Jerome Powell has acknowledged that tariffs may slow economic growth, but expectations remain that the Fed will lower borrowing costs in upcoming meetings, which continues to weigh on the U.S. Dollar and provides some support to gold.
Geopolitical Tensions Persist in the Middle East
On the geopolitical front, Israel continues its military operations in Gaza, including airstrikes on the largest hospital in the southern region, which resulted in the death of Hamas leader Ismail Barhoum. At the same time, Iran-backed Houthis in Yemen launched a ballistic missile at Israel, which was successfully intercepted. In response, the U.S. military conducted airstrikes in Yemen’s northern province of Saada, and the Houthis claimed to have launched further attacks on Israeli targets. These escalating tensions in the Middle East have added to uncertainty, though the impact on gold has been muted.
Market Focus Shifts to Economic Data and PCE Release
Traders are turning their attention to the release of flash global PMIs, which will provide fresh insights into the health of the global economy. The data may offer additional momentum for gold, though the primary focus will remain on Friday’s release of the U.S. PCE Price Index, a key inflation gauge for the Federal Reserve.
Technical Outlook: Support at $3,000 Remains Key
From a technical perspective, gold prices are likely to find support near the $3,000 mark, a crucial psychological level. If this support is broken, gold may experience further selling pressure, potentially targeting the $2,982-$2,978 region, with additional support around $2,956-$2,954. Conversely, the recent all-time high near the $3,057-$3,058 zone may act as resistance. If buying momentum picks up, it could lead to an extension of the recent uptrend, driven by follow-through from bullish traders.
As global developments and economic data continue to unfold, gold’s direction will depend heavily on both geopolitical risks and the Federal Reserve’s policy moves.
