- Gold price attracts some intraday sellers, though any meaningful corrective downfall remains elusive.
- A broadly stable risk sentiment holds bulls from placing fresh bets around the safe-haven XAU/USD pair.
- Fed rate cut bets, subdued USD demand and rising trade tensions lend some support to the yellow metal.
Gold price (XAU/USD) hangs near the lower end of its daily range during the early European session on Wednesday, though it manages to hold above the $3,100 mark amid persistent safe-haven demand. The uncertainty over US President Donald Trump’s aggressive trade policies and their impact on the global economy, along with geopolitical tensions, continue to act as a tailwind for the bullion.
Meanwhile, expectations that the Federal Reserve (Fed) will resume its rate-cutting cycle soon in the wake of a tariff-driven US economic slowdown fail to assist the US Dollar (USD) to attract any meaningful buyers. This, in turn, could further underpin the non-yielding Gold price. Traders, however, seem reluctant and opt to wait on the sidelines ahead of Trump’s reciprocal tariffs announcement.
Daily Digest Market Movers: Gold price draws support from tariff-related uncertainties
- Investors remain worried about the potential economic fallout from US President Donald Trump’s trade policies, which assists the safe-haven Gold price to regain positive traction following the overnight pullback from a fresh all-time peak.
- The recent US macro data pointed to still sticky inflation and slowing economic growth, implying that the economy could be heading towards stagflation, which might force the Federal Reserve to resume its rate-cutting cycle in June.
- The concerns were fueled by the disappointing US ISM Manufacturing Purchasing Managers Index (PMI) on Tuesday, which fell from 50.3 to 49 in March and indicated that business activity contracted for the first time in three months.
- The report also revealed that inflation at the factory gate jumped to the highest level in nearly three years and the Employment Index highlighted a decrease in the sector’s payrolls at an accelerating pace during the reported month.
- Adding to this, the Job Openings and Labor Turnover Survey (JOLTS) showed that the number of job openings on the last business day of February stood at 7.56 million, down from 7.76 million reported in the previous month.
- According to the CME Group’s FedWatch Tool, the markets are currently pricing in the possibility that the Fed would cut rates by 80 basis points this year, undermining the US Dollar and further benefiting the non-yielding yellow metal.
- Asian equity markets tracked the overnight gains on Wall Street, which, along with overbought conditions, might hold back the XAU/USD bulls from placing fresh bets ahead of Trump’s impending reciprocal tariffs announcement.
- In the meantime, the release of the US ADP report on private-sector employment and Factory Orders data might influence the USD, which could provide some impetus to the precious metal later during the early North American session.
Gold price could accelerate the corrective fall once $3,100 pivotal support is broken
From a technical perspective, the overnight pullback from the all-time peak stalled near the $3,100 mark and the subsequent move up favors bullish traders. That said, the daily Relative Strength Index (RSI) stands well above the 70 mark and points to overbought conditions, making it prudent to wait for some near-term consolidation or a modest pullback before positioning for any further gains. Nevertheless, the constructive setup suggests that the path of least resistance for the Gold price remains to the upside.
In the meantime, the $3,100 round figure might continue to protect the immediate downside and act as a key pivotal point. A convincing break below, however, might prompt some long-unwinding and drag the Gold price below the $3,076 area, or the weekly swing low touched on Monday, towards the $3,057-3,058 resistance breakpoint. The downward trajectory could extend further toward the $3,036-3,035 support zone en route to the $3,000 psychological mark, which should act as a strong base for the XAU/USD.