Gold prices have remained stable, trading near $3,040 as of Monday, after an initial 2% drop earlier in the session. The gold price regained momentum, showing resilience despite the volatility caused by escalating trade tensions between the United States and China. As markets brace for more retaliatory measures from China and other countries, gold continues to hold its ground, aided by a weaker US Dollar (USD), dropping stock prices, and a decrease in bond yields.
Investors are now focusing on the upcoming US inflation data, which is expected to play a significant role in shaping market expectations for economic policies under the Trump administration. With a backdrop of growing economic uncertainty, traders are increasingly pricing in the possibility of multiple interest rate cuts by the Federal Reserve (Fed) this year.
Key Market Movers: Rate Cuts and Trade War Concerns
Rate Cut Expectations Intensify
American hedge fund billionaire William Ackman, CEO of Pershing Square Capital Management, urged President Donald Trump to pause the current trade tariffs to allow for a potential trade agreement. Ackman has expressed concerns that the trade war could further erode business leaders’ confidence, as reported by Reuters.
The CME FedWatch Tool reflects a sharp increase in rate cut expectations, with a 49.3% probability of the Fed cutting interest rates in May, up from 33.3% just last Friday. The likelihood of the Fed maintaining rates in June has diminished, with traders anticipating more rate cuts, likely to bring the policy rate down to between 3.75% and 4.00%.
China’s Continued Gold Purchases
China’s central bank, the People’s Bank of China (PBOC), added gold price to its reserves for the fifth consecutive month in March, reinforcing its strategy to accumulate the precious metal as a safe-haven asset amidst growing global trade and geopolitical risks. Gold reserves held by the PBOC rose by 0.09 million troy ounces last month, marking a continuation of its buying spree that began in November after a six-month hiatus. This move highlights the ongoing demand for gold as a store of value during times of economic uncertainty.
Gold Price Technical Analysis: A Safe Haven Amid Volatility
Despite the broader market turmoil, gold has demonstrated its resilience. After dipping below the $3,000 mark, the precious metal quickly recovered and regained support above $3,000. Traders who had previously bought gold below this threshold likely contributed to its swift rebound.
Looking at the technical side, gold faces key resistance near the $3,060 mark, with technical levels around $3,057 and the daily pivot at $3,063. A break above this resistance could open the door to higher levels, with the next intraday target at $3,111. Beyond that, the all-time high of $3,167 remains a potential upside target.
On the downside, the $3,004 level and the S1 support at $2,990 are key areas to watch. While these levels were briefly broken, they have since supported gold’s recovery. If prices fall back below $3,000, the $2,955 level and S2 support at $2,942 could provide further support, preventing a sharp decline below $2,940.
Conclusion: Gold Remains the Safest Bet Amid Global Uncertainty
In summary, gold continues to show strength as a reliable store of value amidst the ongoing trade tensions and growing expectations of Fed rate cuts. With geopolitical risks on the rise and central banks accumulating more gold, the precious metal is likely to remain a favored asset for investors seeking stability. As markets await key US inflation data, traders will closely monitor the Federal Reserve’s next moves and the evolving global economic landscape.
For daily updates and analysis on gold prices and market trends, visit Daily Gold Signal.
