Gold prices faced renewed pressure this week as the XAU/USD pair retreated from recent highs. Despite the pullback, the risk of a steeper slide remains limited, with technical indicators suggesting ongoing support. The market's attention has pivoted to US President Trump's threat of new tariffs on a wide range of imported goods, which has injected uncertainty into global trading dynamics.
The US Dollar has gained momentum, with the US Dollar Index (DXY) reaching fresh highs. This upward trend in the Greenback has been a key factor in the downward pressure on gold prices. Meanwhile, the EUR/USD pair has dropped to daily lows around the 1.0400 zone, further emphasizing the dollar's strength across currency markets.
Investors are also closely monitoring monetary policy developments. There is speculation that the Federal Reserve might cut interest rates more than initially anticipated, mirroring actions taken by the Bank of England. These potential rate adjustments are adding another layer of complexity to the current economic landscape.
Technical analysis of the XAU/USD pair reveals that its ongoing slide appears corrective rather than indicative of a long-term downtrend. The pair remains above all its moving averages, with a bullish 20 Simple Moving Average (SMA) providing dynamic support at approximately $2,845.00. This suggests that while selling pressure is present, significant support levels are maintaining the overall bullish outlook.
On Wednesday, spot gold reached a fresh all-time high, trading as high as $2,947.06 during European trading hours. However, increased selling pressure has since caused prices to recede toward daily lows near the $2,930 level per troy ounce. The robust performance of the Greenback is a major contributor to this pressure on gold prices, alongside mixed signals from US yields.
The Federal Open Market Committee (FOMC) is set to release the Minutes of its January meeting, which could provide further insights into future monetary policy direction. Market participants are keenly awaiting these details, as they may influence both currency and precious metal markets.
In terms of technical indicators, the 20 SMA currently lies near $2,913.05, offering immediate support for the XAU/USD pair. The 100 and 200 SMAs continue their upward trajectories below the 20 SMA, reinforcing the notion of a supportive technical structure for gold prices despite recent fluctuations.