Gold price (XAU/USD) experienced a significant pullback, giving up most of its intraday gains after hitting a fresh record high. As of the European session on Tuesday, the precious metal traded closer to the lower end of its daily range. Despite this, it still remained comfortably above the $2,900 mark due to ongoing concerns about global trade conflicts and geopolitical tensions.
Trade Tensions and Protectionism Boost Gold Price
In recent weeks, concerns about a potential global trade war have driven the price of gold higher. US President Donald Trump has introduced tariffs on imported commodities and has announced plans to impose reciprocal tariffs on other countries. These moves have led to a rise in gold’s appeal as a safe-haven asset.
Alongside this, there are growing expectations that Trump’s protectionist policies will fuel inflation. As inflation rises, gold becomes an attractive hedge, pushing its price upward. Furthermore, speculation that the Federal Reserve may hold interest rates steady, given the ongoing resilience in the US labor market, has provided support for the gold price.
USD Strength Limits Gold’s Gains
Amid these factors, the US Dollar (USD) strengthened, reaching a one-week high. This shift in USD dynamics, combined with rising inflation expectations, led to some profit-taking in gold markets. The USD’s strength capped the bullish momentum for the yellow metal.
Trump’s decision to sign proclamations imposing tariffs on metals and ending exclusions on steel and aluminum has added further pressure on the gold price. This has propelled the safe-haven metal to new highs during the Asian session.
Profit-Taking and Powell’s Testimony
As the USD rose, profit-taking began, especially as market participants repositioned ahead of Federal Reserve Chair Jerome Powell’s upcoming testimony. Powell’s statements on the future of interest rates will be critical, as they may shape the near-term direction of both the USD and gold prices. Investors are keen to understand whether the Fed will stick to a hawkish stance or shift toward a more dovish approach.
Key Support Levels for Gold
Technically speaking, if gold price falls below the $2,900 level, support is expected near the $2,886-$2,882 range. If the decline continues, further support could be found around $2,855-$2,852, with a potential target of $2,834. Any drop beyond $2,800 could present a buying opportunity for investors.
The $2,842-$2,843 level, formed during the Asian session swing high, now represents a strong resistance. Bulls may pause at this level, especially given the overbought conditions on the Relative Strength Index (RSI). However, the broader market outlook suggests the trend for gold remains upward, with potential for further gains in the coming months.
Conclusion: What’s Ahead for Gold?
As market uncertainty persists and Powell’s testimony draws nearer, the gold price remains a critical asset to monitor. The combination of geopolitical risks, inflation fears, and market reactions to the Fed’s decisions will continue to influence the yellow metal’s movements. Stay updated with the latest Gold Price Trends and Daily Gold Updates for expert insights.
