After reaching a new all-time high near 3,500 dollars per ounce, the price of gold (XAU/USD) experienced a slight decline on Tuesday morning. This movement is attributed to a temporary pause by investors, after weeks of continuous growth.
However, despite the retracement, the underlying sentiment remains positive, supported by an increase in demand for safe-haven assets due to persistent commercial and geopolitical uncertainties.
Trade tensions support the price of gold
The international geopolitical and macroeconomic context strongly influences the trend of gold. The aggressive trade policies of the President of the United States, Donald Trump, continue to put pressure on the markets.
The fluctuating announcements regarding tariffs are eroding investors’ confidence in the stability of the US economy. In particular, the new tariffs imposed by Trump fuel the fear of a recession, thus pushing operators to seek refuge in safe-haven assets like gold.
Attacks on the Fed and fears for monetary independence
Another reason for concern is the growing tension between Trump and the Federal Reserve. The statements of the president, who openly criticized Jerome Powell for not cutting interest rates more decisively, have reignited the debate on the independence of the American central bank.
According to some sources, the Trump administration is even considering the possibility of removing Powell from his position before the end of his term. This scenario has weakened the US dollar, increasing the appeal of gold which, being a non-yielding asset, benefits from lower interest rates.
Anticipations on US rates: cuts in sight
The market expectations are clear: the Fed is expected to cut interest rates by 25 basis points in June and that, over the course of 2025, at least a triple reduction in the cost of money will be implemented. These prospects fuel bull bets on gold, which benefits from an expansive monetary policy context and minimal interest rates. However, this is only if this context is accompanied by increasing global geopolitical tension. If these tensions were to ease, a cut in interest rates by the Fed could move capital towards risk-on assets.
Russian-Ukrainian conflict and demand for gold as a safe haven asset
Not only economic tensions, but also geopolitical ones contribute to the rush for gold. In recent hours, clashes in Ukraine have intensified, with Russia launching 96 drones and three missiles in the eastern and southern regions of the country, ending a fragile Easter truce that lasted only 30 hours. This event has further increased the demand for gold from those investors seeking safety in an increasingly uncertain international climate.
Macroeconomic indicators and upcoming events to monitor
Market operators are now looking at the Richmond Manufacturing Index in the United States and the statements of some important members of the Federal Open Market Committee (FOMC) to assess the next directions of the dollar and, consequently, the price of gold. However, the main focus will be on the flash PMI indices, to be published on Wednesday, which could provide new insights into the health of the global economy and directly influence the quotations of the precious metal.
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Technical signals: eyes on the correction
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From a technical standpoint, gold shows signs of overbought. The daily RSI index remains well above the 70 level, suggesting that a consolidation phase or a possible pullback could be healthy for the continuation of the trend. Analysts believe that, before embarking on new bull initiatives, it is prudent to wait for a slight dip or at least a stabilization phase.
In case of a more pronounced correction, several support levels have been identified to monitor: the first is located in the area of $3,425-$3,423, followed by the psychological threshold of $3,400. A further decline could push the price down to the region between $3,358 and $3,357, with a decisive support at $3,344. Breaking this last level could open the doors to deeper declines.
A necessary pause, but the trend remains clear
In summary, although the price of gold has momentarily paused its run, the moment of pause appears more like a technical breather rather than a trend reversal. The global context – consisting of economic instability, political pressures on the Fed, and war tensions – continues to be favorable for gold. As long as these factors persist, the medium to long-term direction for the yellow metal seems to remain bullish.