gold prices have pulled back from a near three-month high due to rising US bond yields and a strengthening US Dollar. Though there are expectations for further interest rate cuts by the Federal Reserve, these factors have tempered the enthusiasm of US Dollar proponents. Additionally, concerns over potential tariff plans by former President Trump may act as a support mechanism for gold , traditionally viewed as a safe haven asset.
During the Asian trading session on Thursday, gold prices drifted lower after reaching approximately $2,764 the previous day. The recent rebound of the US Dollar from its monthly low has contributed to some downward pressure on gold . This decrease comes despite a positive sentiment in equity markets, which has undermined demand for the precious metal.
However, multiple factors could counterbalance this downward trend in gold prices. Signs of easing inflation in the US have rekindled market speculation regarding possible rate cuts by the Federal Reserve this year. This scenario could ultimately weaken US bond yields and the Dollar. Furthermore, uncertainties surrounding Trump’s tariff initiatives could potentially lead to increased market volatility, limiting declines in gold prices.
As rebounding US bond yields strengthen the Dollar, the immediate downside for gold appears to be limited. While geopolitical tensions have relaxed, the unpredictability of Trump’s proposed policies remains a concern, complicating the economic landscape. Investors are absorbing the possibility of the Federal Reserve maintaining a hawkish stance amidst inflationary pressures while also considering their potential for lowering interest rates later this year.
Upcoming economic indicators, such as the US Weekly Jobless Claims and the Bank of Japan’s interest rate decision, will likely influence gold ’s trajectory. Rate announcements from both the Federal Reserve and the European Central Bank next week could introduce further volatility, impacting gold ’s movement.
Technically, the $2,720 to $2,725 range represents a crucial level for bullish traders, while support near $2,625 could act as a cushion against further declines. Should prices drop to the $2,700 level, significant technical support exists, potentially guiding movement toward lower levels near $2,662. Conversely, if gold surpasses its recent high, it could aim to break past the all-time peak of approximately $2,790, setting the stage for a continued upward trend.
