Gold (XAU/USD) is facing challenges in maintaining momentum from the previous day’s rally, attracting some selling pressure during the Asian session on Wednesday. The US Dollar (USD) has regained positive traction, climbing back toward a nearly three-week high reached on Tuesday, while a generally positive tone in equity markets adds further headwinds for the safe-haven precious metal.
However, ongoing uncertainty regarding US President Donald Trump’s reciprocal tariff plans, set to take effect next week, has helped Gold maintain support above the crucial $3,000 psychological mark. Additionally, expectations that the Federal Reserve (Fed) may resume its rate-cutting cycle soon, amid recession fears in the US, are holding traders back from making aggressive bearish bets on the non-yielding yellow metal.
Market Movers: Gold Faces Mixed Fundamental Factors
The US Dollar briefly pulled back from its near-three-week high after Tuesday’s data showed a decline in the Conference Board’s US Consumer Confidence Index, falling to a four-year low of 92.9 in March. The report also revealed that the Expectations Index dropped to 65.2, the lowest level in 12 years, which traditionally signals the possibility of a recession.
This data came on the heels of the Federal Reserve’s recent downgrade of its growth outlook, largely influenced by the uncertainty surrounding Trump’s trade policies. Additionally, reports that US reciprocal tariffs, set to take effect on April 2, will be more targeted, have alleviated inflation concerns, giving the Fed room to continue cutting rates. This scenario would benefit Gold, which is a non-yielding asset.
The Fed has indicated it will implement two 25 basis point rate cuts by the end of this year, with markets pricing in the likelihood of rate cuts in June, July, and October. This overshadowed more hawkish comments from Fed Governor Adriana Kugler, who suggested keeping rates steady for some time.
Meanwhile, Trump’s secondary tariff on Venezuela, and the looming reciprocal tariffs on about 15 major US trading partners, have kept investors on edge. In addition, an agreement between Russia and Ukraine to halt military strikes in the Black Sea and on energy infrastructure, combined with optimism around China’s stimulus measures, has maintained a positive sentiment in equity markets, limiting aggressive bets on Gold.
Market Focus and Key Data Ahead
Traders are now awaiting the release of US Durable Goods Orders on Wednesday, along with speeches from key Federal Open Market Committee (FOMC) members, which could provide further direction for both the USD and Gold. The main focus, however, remains on the US Personal Consumption Expenditure (PCE) Price Index, as it could provide critical insights into the Fed’s rate-cut strategy and drive the price of Gold.
Gold’s Technical Outlook: Key Support and Resistance Levels
From a technical perspective, Gold remains bullish above the $3,000 mark, with positive momentum indicated by the oscillators on the daily chart. A move above the overnight swing high of $3,036 would reinforce the constructive outlook and drive Gold towards its all-time peak around $3,057-$3,058, touched last week.
On the downside, the $3,000 level remains a critical support zone for Gold. A break below this level could trigger technical selling, potentially pushing the XAU/USD pair to the $2,982-$2,978 range. Further downside could see a test of support near the $2,956-$2,954 region, which corresponds to the previous resistance breakpoint.
