Gold prices dipped on Tuesday, retreating 0.28% to $3,114 as traders took profits ahead of the highly anticipated “Liberation Day” in the US. On April 2, President Donald Trump is expected to announce new tariffs aimed at addressing the country’s trade deficit. Market sentiment remains mixed as investors await clarity on the size and scope of these tariffs, with speculation suggesting they could be as high as 20%, according to The Washington Post.
Despite the recent rally in bullion, uncertainty around the tariff announcements kept traders on edge. The US economic data released on Tuesday painted a bleak picture, with futures markets pricing in over 78 basis points of potential interest rate cuts by the Federal Reserve (Fed). Business activity in the US showed a mixed outlook, with S&P Global indicating expansion, while the Institute for Supply Management (ISM) pointed to weakening conditions ahead of the tariff decisions.
Job market data revealed some tightening, as the US Department of Labor reported a decline in job openings, though the labor market remains generally strong. However, concerns over a potential US recession are growing. Goldman Sachs raised the probability of a recession from 20% to 35%, citing pessimism in business and household sentiment, compounded by Washington’s tolerance for a slower economic pace.
The latest forecast from the Atlanta Fed’s GDPNow model predicts a contraction of -3.7% for Q1 2025, a sharp downgrade from the previous estimate of -2.8%.
Key Economic Data Ahead
This week, investors are eyeing the release of the ISM Services PMI, Nonfarm Payrolls (NFP) data, and a speech by Fed Chair Jerome Powell on Friday, which could provide further insight into the central bank’s policy direction.
Market Movers
The US 10-year Treasury note yield fell four basis points to 4.169%, and US real yields edged down by two basis points to 1.832%, as reflected in the US 10-year Treasury Inflation-Protected Securities (TIPS) yields. The ISM Manufacturing PMI for March dropped sharply, from 50.3 to 49.3, signaling contraction in the sector, with tariffs highlighted as a major contributor to the slowdown.
The JOLTS report showed a decrease in job openings to 7.568 million in February, missing expectations, though vacancies remain relatively stable. Conversely, S&P Global’s Manufacturing PMI showed modest growth, rising from 49.8 to 50.2.
On the commodities front, major Wall Street banks, including Goldman Sachs, Société Générale, and Bank of America, raised their gold price forecasts, now targeting $3,300 as the next upside level.
Gold Price Technical Outlook
Gold’s uptrend remains intact, although the price action on Tuesday formed a Doji candlestick, indicating indecision among traders as they await Trump’s tariff announcement. The Relative Strength Index (RSI) suggests that gold may be overbought, raising the possibility of a short-term retracement.
However, as long as XAU/USD stays above the $3,100 level, buyers remain in control. A break below this level could expose support at the March 20 high of $3,057, followed by the $3,000 mark. If the rally extends, the next resistance would be the all-time high at $3,149, with a potential move toward $3,200.
