01 Apr 2025

Gold prices have retreated after reaching a new all-time high earlier this Tuesday. A favorable risk sentiment and a slight increase in the US Dollar have led to some profit-taking among traders. Concerns regarding global trade tensions and geopolitical risks are likely to provide ongoing support for the commodity.

The price of gold (XAU/USD) has given back a significant portion of its early gains following the establishment of a new record high, as traders decide to secure profits in light of overbought market conditions and in anticipation of US President Donald Trump's announcement regarding reciprocal tariffs. Additionally, a positive sentiment in Asian equity markets has negatively impacted the precious metal, while a modest rise in the US Dollar has contributed to the intraday decline.

Nevertheless, ongoing concerns about the potential economic repercussions of the Trump administration's assertive trade policies are expected to bolster the safe-haven appeal of gold. Moreover, expectations that the Federal Reserve will soon resume its rate-cutting measures, driven by fears of a slowdown in US economic growth due to tariffs, should limit the gains of the US Dollar and provide support for the non-yielding yellow metal.

Daily Digest Market Movers: Gold price bulls decide to secure some profits ahead of Trump's reciprocal tariffs

US President Trump has dampened expectations that the tariffs would be confined to a select group of countries with significant trade imbalances, announcing on Sunday that reciprocal tariffs would apply to virtually all nations. This announcement adds to the existing 25% tariffs on steel, aluminum, and auto imports, raising concerns about an escalating global trade conflict.

Moreover, investors appear increasingly convinced that a slowdown in US economic activity driven by tariffs will compel the Federal Reserve (Fed) to initiate a new cycle of rate cuts soon, despite persistent inflation. This scenario has contributed to gold prices achieving their strongest quarterly performance since 1986, reaching a new record high on Tuesday.

Currently, the markets are anticipating that the US central bank will reduce borrowing costs by 80 basis points by the end of the year. This expectation keeps US Treasury bond yields low, which does not significantly attract buyers to the US Dollar and further supports the appeal of the non-yielding yellow metal.

On the geopolitical front, Ukrainian officials reported early Monday that Russia bombarded the city of Kharkiv in northeastern Ukraine for the second consecutive night. Additionally, Ukraine’s President, Volodymyr Zelenskyy, stated that Russia had launched over 1,000 drones in the past week and urged a response from the US and its allies.

Earlier this month, Israel concluded its ceasefire with the Hamas militant group and resumed air and ground assaults. Furthermore, the Israeli military has issued mass evacuation orders for Rafah, indicating a potential new ground operation in the city, which heightens the risk of further escalation in the region.

Traders are now focusing on this week's significant US macroeconomic releases, set to occur at the start of the new month, beginning with the JOLTS job openings and ISM Manufacturing PMI on Tuesday, followed by the ADP report on Wednesday and the US ISM Services PMI.

Support Levels:

1. $3,110 - $3,115 → Previous consolidation before the breakout.

2. $3,080 - $3,090 → A strong demand zone where buyers stepped in.

3. $3,050 → A psychological support level and previous resistance turned support.

Resistance Levels:

1. $3,140 - $3,150 → Recent peak, acting as immediate resistance.

2. $3,175 - $3,180 → Next key level if price breaks above $3,150.

3. $3,200 → Major psychological resistance.

Potential Targets:

• If $3,150 breaks, gold could push toward $3,175 - $3,200.

• If a pullback happens, look for buying opportunities around $3,110 - $3,080.