Gold price extended their decline for a second consecutive day, reaching a seven-day low of $3,023 per troy ounce. The gold price drop of more than 2.80% follows Federal Reserve Chair Jerome Powell’s hawkish remarks on tariffs and inflation during a conference in Virginia.
XAU/USD Plunges to $3,023 as Powell Warns of Lingering Tariff-Driven Inflation
Money market traders had previously anticipated over 1% in Fed rate cuts by 2025. However, Powell’s Powell inflation speech has reduced expectations of aggressive monetary easing. Additionally, concerns about a potential recession are increasing, as indicated by the deepening US 10-year to 3-month yield curve inversion, where short-term rates now exceed long-term yields by 25 basis points. The gold price drop continues to be influenced by these economic shifts, with investors reassessing their positions. The gold market analysis suggests that the market is becoming more cautious, with investors weighing the risk of prolonged inflation.
Market Reaction and Impact on Gold Prices
Following Powell’s remarks, gold prices extended their losses. Additionally, the US dollar strengthened, with the US Dollar Index (DXY) rising 0.47% to 102.56. The rising dollar often puts downward pressure on gold prices, as it becomes more expensive for non-dollar holders.
Money market traders had previously anticipated over 1% in Fed rate cuts by 2025. However, Powell’s stance has reduced expectations of aggressive monetary easing. Furthermore, concerns about a potential recession are increasing, as indicated by the deepening US 10-year to 3-month yield curve inversion, where short-term rates now exceed long-term yields by 25 basis points.
Technical Outlook on Gold Prices
Key Support and Resistance Levels:
- Support: If gold prices breach the $3,000 psychological level, sellers may target the 50-day Simple Moving Average (SMA) at $2,937, followed by the $2,900 mark.
- Resistance: If buyers regain control, gold must reclaim $3,100 to reverse the bearish momentum and signal a potential recovery.
Conclusion
Gold prices have suffered a steep decline due to Powell’s hawkish stance on inflation and tariffs. With the Federal Reserve maintaining a cautious approach to rate adjustments, investors are re-evaluating expectations for monetary easing. The Gold market analysis participants should closely monitor further economic indicators and Fed statements for signs of policy shifts that could impact gold’s trajectory.
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