gold prices recorded an upward correction after dipping to three-day lows near $3,310 on Wednesday, as bargain hunters stepped in amidst a faltering recovery of the US Dollar. Key economic data on the horizon, specifically the US S&P Global preliminary business PMI, influenced trading sentiment.
This week has seen gold undergo significant volatility, reaching a peak at $3,500 before retreating towards $3,300. The surge to record levels was largely attributed to increasing market anxiety surrounding the independence of the US Federal Reserve, particularly in the wake of verbal attacks from President Trump aimed at Fed Chair Jerome Powell. As concern shifted from the US-China trade conflict to Trump’s comments regarding the Fed, gold prices soared.
However, by Tuesday, there was a brief recovery for the US Dollar, aided by statements from US Treasury Secretary Scott Bessent, who expressed optimism regarding a potential de-escalation in trade tensions with China. This led many investors to take profits on gold positions, contributing to a $120 correction as prices fell to around $3,380.
During the Asian trading session, the gold price declined further as investors responded to Trump’s mixed signals on trade negotiations with China, including a suggestion that the final tariff rates would decrease substantially. Despite this, the recovery of the USD met resistance as uncertainty around Trump’s intentions persisted.
Looking ahead, attention is directed towards upcoming S&P Global Manufacturing and Services PMI data, which are expected to provide further insight into the US economic landscape. A more robust manufacturing report could influence market expectations about potential Federal Reserve interest rate cuts, particularly as Fed fund futures indicated a slight pullback in expected cuts for the year.
From a technical standpoint, the daily chart demonstrates an easing in the 14-day Relative Strength Index (RSI) from overbought levels but still within the bullish range. While the price holds above the $3,300 level, there’s optimism for buyers. If the decline continues, key support might emerge around the 21-day Simple Moving Average at $3,163. Conversely, if the upward momentum resumes, gold could target previous highs around $3,500.
