- Gold Price Bulls appears to be reluctant amid a positive risk tone and a recent US dollar recovery.
- The Fed's resumption of interest rate reduction cycles bets that it will soon support bullion.
- Tuesday's US macro data and Fed Speak could provide driving force for the Xau/USD pair.
Gold Price (XAU/USD) is struggling to gain meaningful traction during Tuesday's Asian session, but it surpasses the $3,000 psychological mark in a mix of fundamental clues. The US dollar (USD) has maintained its recent recovery profit from its recent months' lows, approaching its three-week high on Monday. Separately, the bright market mood, strengthened by US trade tariffs, Russia-Crane peace agreements and hopes of optimism about China's stimulus, serves as a headwind for precious metals in safe havens.
Meanwhile, the growing acceptance of the Federal Reserve resuming its rate-cut cycle soon prevents the USD Bulls from making aggressive bets amid concerns about a tariff-driven US economic slowdown. This, in turn, is seen lending some support to the incredible gold price. So it's wise to wait for a sustained break and acceptance of less than $3,000 mark before confirming that Xau/USD is topped in the near term and positioned for an extension of the pullbacks that has been in history recently.
Daily Digest Market Movers: Gold prices are defensive in the mood of luxury markets
- Global risk sentiment hopes that US President Donald Trump's so-called mutual tariffs, scheduled to take effect on April 2, will be narrower and less strict than initially feared.
- Russia's state media RIA reported that a joint statement from the US and Russia is expected on Tuesday after the inter-Japanese talks in Saudi Arabia focused on narrow proposals for a maritime ceasefire contract for the Black Sea.
- According to a report by the Financial Times, China is considering including services in its subsidy programme to stimulate consumption, further increasing investors' confidence and undermining safe gold prices.
- The US dollar will maintain its recent profits at nearly three weeks' highs on Monday in response to a more than expected release from the US compound PMI, which rose from 51.6 the previous month to 53.5 in March.
- Last week, the Federal Reserve lowered its 2025 growth forecast and hiked its inflation outlook amid uncertainty over Trump's tariffs, indicating it is likely to achieve a 25 basis point rate cut in 2025.
- Meanwhile, concerns about US economic growth have led traders to lift bets that the Fed can resume its policy-measurement cycle soon, increasing profits in the US dollar and providing support for non-revenue yellow metals.
- President Rafael Bostic, the federal president of Atlanta, said Monday that he expects inflation to slow down over the coming months, with the central bank seeing benchmark rates cut by just a quarter point in 2025.
- Traders are currently aiming for the US Economic Docket on Tuesday. It features the Conference Committee's Consumer Trust Index, new home sales and the release of the Richmond Manufacturing Index.
- Separately, speeches by influential FOMC members were able to drive demand for the US dollar and create short-term opportunities around the Xau/USD pair later in the North American session.
- However, the focus remains glued to the US Personal Consumption Expense (PCE) price index on Friday, which could provide new clues about the Fed's future rate-cutting path.
Gold priced bears should wait for a sustained break below $3,000 before making a fresh bet
From a technical standpoint, the Xau/USD pair exhibits some resilience near the $3,000 mark. The above handles can act as important important points. This could encourage fragmented technical sales if it breaks and drag gold prices into areas between $2,982 and $2,978. The revised decline could further expand to a resistance breakpoint of $2,956-$2,954, and is now supported.
On the back, the $3,033 area, or overnight swing high, appears to be serving as the highest hurdle of all time, ahead of the roughly 3,057-3,058 zones mentioned last week. Given that the oscillators on the daily charts are held comfortably in positive territory, some follow-through purchases are considered new triggers for the Bulls, setting the stage for an extension of the uptrend a few months ago.
Gold FAQ
Gold has played an important role in human history as it is widely used as a medium of value and exchange. Apart from the gem's brilliance and usage, precious metals are now widely viewed as safe haven assets. In other words, it is considered a good investment in times of turbulence. Gold is also widely viewed as a hedge against inflation and depreciation currencies, as it is not dependent on a particular issuer or government.
The central bank is the largest holder of money. With the aim of supporting currency in turbulent times, central banks tend to buy gold to diversify reserves and improve the perceived strength of the economy and currency. High gold reserves provide a source of trust in the country's solvency. The central bank added 1,136 tonnes of gold to its bookings in 2022, worth around $70 billion, according to data from the World Gold Council. This is the best purchase every year since the record began. Central banks in emerging economies such as China, India and Türkiye are rapidly increasing their gold reserves.
Gold is inversely correlated with the US dollar and the US Treasury, both major reserve assets and safe haven assets. As the dollar depreciates, gold tends to rise, allowing investors and central banks to diversify their assets during turbulence. Gold is also inversely correlated with risk assets. While rallies in the stock market tend to weaken gold prices, selling in high-risk markets tends to favor valuable metals.
A wide range of factors allow prices to move. The fear of geopolitical instability or deep recession can quickly escalate gold prices due to their safe conditions. As an asset that does not yield, gold tends to rise at lower interest rates, but the cost of higher money usually weighs the yellow metal. Still, most movements depend on how the US dollar (USD) behaves, as the asset's price is in dollars (Xau/USD). Strong dollars tend to keep the price of gold down, while weaker dollars can push the price of gold up.
