Gold prices (XAU/USD) struggled to maintain their momentum on Thursday after spiking to a fresh all-time high in response to the announcement of US President Donald Trump’s reciprocal tariffs. The rally was short-lived, as slightly overbought conditions on the daily chart prompted traders to take profits, leading to an intraday pullback. Despite this retreat, a significant downside appears unlikely due to growing concerns over global economic growth and the possibility of a recession in the United States.
Economic Concerns and Fed Expectations Support Gold The selling pressure on the US Dollar (USD) remains strong as market participants increase their bets that a slowdown in the US economy will force the Federal Reserve to resume its rate-cutting cycle. This environment of risk aversion has kept US Treasury bond yields near multi-month lows, providing ongoing support for non-yielding assets like gold. As a result, any subsequent decline in gold prices could present a buying opportunity, with losses likely to be cushioned by the prevailing risk-off sentiment.
Market Reactions to Tariffs and Safe-Haven Demand Trump’s announcement of a 10% baseline tariff on all imports, alongside higher duties on several of the US’s largest trading partners, sent shockwaves through global financial markets. In response, China’s Commerce Ministry vowed to take countermeasures to protect its interests. The growing risk of a trade war has sparked concerns about the potential negative impact on the global economy, driving demand for safe-haven assets like gold.
This demand, coupled with the emergence of significant USD selling, lifted gold prices to a new record high. Investor worries about Trump’s protectionist policies have fueled expectations of a US recession, with markets pricing in a 70% chance that the Federal Reserve will cut interest rates in June. The ongoing decline in US Treasury yields has put further pressure on the USD, contributing to gold’s upward movement.
US Economic Data and Trade Developments On the economic front, the US ADP report showed that private-sector employers added 155,000 jobs in March, surpassing expectations of 105,000 and the previous month’s revised figure of 84,000. However, despite the positive job data, concerns over the economic impact of Trump’s trade policies kept the USD under pressure. Investors now await further economic data, including the Weekly Jobless Claims and the ISM Services PMI, which could influence USD price dynamics. Trade-related headlines will also remain a key factor in driving the gold market, ahead of the US Nonfarm Payrolls (NFP) report on Friday.
Gold Price Technical Outlook From a technical perspective, the Relative Strength Index (RSI) on the daily chart remains in overbought territory, limiting the ability of gold bulls to add fresh positions. As a result, some near-term consolidation or a modest pullback is expected before the uptrend can continue. However, the broader technical setup favors bullish traders, suggesting that the path of least resistance remains upward.
A corrective move below the Asian session low of around $3,123 could present a buying opportunity, with the $3,100 mark likely to act as a key support level. A break below this could prompt a wave of long-unwinding, potentially dragging gold prices toward the $3,076 area, the $3,057-3,058 region, and the psychological $3,000 level.
