Gold prices (XAU/USD) remained stable on Friday, holding steady after pulling back from an all-time high of $3,358. Investors are booking profits ahead of the long Easter weekend, with significant uncertainty surrounding U.S. President Donald Trump’s proposed tariffs on imports and ongoing geopolitical tensions contributing to the precious metal’s status as a safe haven asset.
However, the market sentiment has shifted with Federal Reserve Chairman Jerome Powell adopting a more hawkish stance, reducing the likelihood of a rate cut in June. This stance could strengthen the U.S. dollar, potentially putting downward pressure on the price of gold, which is priced in dollars. Powell warned that weak economic growth combined with high inflation might lead to stagflation, a scenario that could challenge the Fed’s policy goals. The Federal Reserve’s Mary Daly is scheduled to speak later today, but with Good Friday limiting trading volume, market reactions are expected to be muted.
Gold Remains Supported by Geopolitical Uncertainty
Despite a slight dip, gold remains supported by a broadly weaker dollar, uncertainties surrounding trade tariffs, and concerns about a global recession. Lukman Otunuga, senior research analyst at FXTM, emphasized these factors as the main drivers behind the commodity’s resilience.
Recent U.S. labor market data showed positive signs, with Initial Jobless Claims for the week ending April 12 dropping to 215,000, below expectations and the previous week’s revised figure of 224,000. However, Continuing Jobless Claims increased by 41,000, reaching 1.885 million, slightly above the revised figure from the previous week.
U.S. economic data also showed a mixed picture for housing, with Building Permits rising by 1.6% to 1.482 million in March, exceeding expectations, while Housing Starts fell to 1.324 million in the same month, down from February’s revised 1.494 million.
Traders are factoring in an almost 86 basis points of Fed rate cuts by the end of 2025, with the first cut expected in July, according to the CME FedWatch tool.
Gold’s Price Action: Bullish but Caution Advised
The gold price is trading flat on the day, maintaining a bullish bias as it stays above the critical 100-day Exponential Moving Average. However, the 14-day Relative Strength Index (RSI) has surged above the 70.00 mark, indicating overbought conditions. This suggests that a period of consolidation or a temporary sell-off may be in store.
The immediate resistance level for gold is $3,355, marked by the upper boundary of the Bollinger Band. A sustained break above this level could push the price toward the $3,400 psychological level. On the downside, the key support level to watch is the low of April 18 at $3,230, with further support seen at $3,105, the low from April 2.
As investors weigh geopolitical risks and central bank policies, the outlook for gold remains uncertain, though the metal’s safe-haven appeal is likely to continue driving interest.
