In response, gold prices have skyrocketed from a weekly bottom of $3,283 earlier this week. They have since bounced back to reclaim the key 38.2% Fibonacci Retracement level at $3,297. This uptick comes amid heightened market volatility, particularly influenced by recent tariff announcements from U.S. President Donald Trump, which have raised concerns among investors. With gold on the rebound once again, analysts are watching to see how it holds up against important technical levels.
Thursday’s gold price action was an extension of the strong mid-week bottoming action, a sign of robust buying interest. The precious metal’s ability to recover from a test of the 38.2% Fibonacci support level—shown as the black line in the chart above—has been key to this rebound. On the upside, gold must conquer the 50-day Simple Moving Average (SMA) at $3,323. That whipsaw action has dramatic implications, as this important level may determine the asset’s short-term trajectory.
Technical Analysis of Gold Prices
As gold prices continue their bullish march, the importance of the 50-day SMA should not be underestimated. In the case presented above, the 50-day SMA serves as a major support and resistance zone. Gold would need to convincingly recapture this area in order to carve out a more bullish trajectory. If gold can successfully surpass the 50-day SMA, it could find acceptance above this critical level, potentially leading to further gains.
As such, if gold can’t decisively breach this resistance, it will probably face significant selling pressure. If sellers return to the stage, this would drive prices lower to the 38.2% Fibonacci support at $3,297 once more. A break below the 50-day SMA would likely confirm bearish sentiment and could expose further downside risks. According to analysts, acceptance under $3,297 could open the floodgates, pushing prices back down to retest the monthly low of $3,248.
Today, gold prices are hitting record highs. This rise is further supported by a bullish 14-day Relative Strength Index (RSI) divergence value indication, suggesting that bullish momentum is gaining strength. This typically bullish technical indicator seems to imply that the broader market is finally turning against the gold bear to create a more bullish gold buyer’s paradise.
Market Influences and Economic Factors
A confluence of these externals have recently buoyed gold, bringing it out of the steep price decline of the last decade. The recent uncertainty with U.S. fiscal policy, especially over the last month from President Trump’s tariff declarations, has caused a great fear amongst investors. Yet collectively, these tariff measures have the potential to greatly disturb international trade relationships and our own economic stability.
Aside from geopolitical worries, declining U.S. Treasury bond yields have underpinned gold prices. When bond yields fall or are anticipated to fall, gold’s non-yielding nature becomes less of a drawback that drives investors towards gold, increasing demand for the precious metal. A generally weaker U.S. Dollar has supported gold’s quest to reclaim its historical “safe-haven” status in the capital markets.
A month later in March, a recent Reuters article outlined that only a “few” of Federal Reserve officials see interest rate cuts taking place this month. The overwhelming majority of officials would like to see bigger cuts later in the year. This may signal a longer-than-anticipated pause in rate cuts, which could help provide a more favorable backdrop for gold investment. Generally, lower interest rates are accompanied by stronger gold prices.
Central Bank Activity and Long-Term Outlook
Gold’s rise is buoyed too by unprecedented central bank activity around the world. Just in 2022, central banks were heavy buyers adding a historic net 1,136 tonnes of gold valued at about $70 billion to their reserves. Major tick up in central bank demand for gold. It points to gold’s character as a safe-haven asset and its reinvigorated importance to diversifying reserves amid economic tumult.
As we step into the future, gold prices will undoubtedly remain subject to technical analysis and macroeconomic factors. Gold buyers will have to mount a difficult battle at the 23.6% Fibonacci level of $3,377. That kind of opposition may prove a significant obstacle to their plans to raise prices.