gold prices experienced a decline on Tuesday following a defense of the $3,260 support level the day prior. The strengthening US Dollar, bolstered by optimism surrounding trade agreements, has contributed to the downward pressure on gold . Despite this, the daily Relative Strength Index (RSI) remains above the midpoint, hinting at potential resilience in gold prices.
In early Asian trading on Tuesday, gold tested the critical support level at $3,330. The heightened demand for the US Dollar, attributed to positive sentiment regarding trade negotiations, is weighing on gold . The dynamic in the market has shifted, with sellers gaining ground in the backdrop of favorable trade discussions with major trading partners. Recent remarks from US Treasury Secretary suggest significant proposals have been made to mitigate tariffs, with India anticipated to finalize a deal soon.
Additionally, the US President’s more conciliatory approach towards China, coupled with Beijing’s exemptions on certain US goods from retaliatory tariffs, has positively influenced market sentiment. This environment has encouraged risk appetite, further bolstering the US Dollar while investors adjust their positions as the month of April concludes. Most traders are adopting a cautious stance, avoiding new positions in the Dollar and gold ahead of the US’s upcoming GDP data release for the first quarter. The data could shed light on the economic impact of tariffs and, if negative, could reignite recession fears and significantly boost gold ’s appeal.
As the market navigates through trade-related news and month-end repositioning, these factors will play a crucial role in shaping gold price movements. Technically, gold is on the brink of a downside break from a three-week rising channel. For the rising channel breakdown to be validated, a close below the rising trendline support at $3,300 is necessary. The $3,260 region represents immediate support, while a sustained decline might lead to further bearish trends approaching the $2,975 level, where the recent rally initiated in early April. However, if buyers defend the $3,300 support, a rebound toward $3,370 could materialize, with aspirations of reaching $3,400 and potentially the record high of $3,500 thereafter.
