Gold prices (XAU/USD) fell for the second consecutive day. This drop follows an intraday increase that hit a high of $3,414 to $3,415. The market is heading into the European session on Thursday with them very much under the pump still. This trend is a perfect demonstration of the confluence of factors affecting the precious metal and the U.S. dollar.
The Federal Reserve has lately been more vague than usual about the economic outlook. That ongoing change is driving today’s unprecedented market forces. The central bank has indicated they won’t reduce interest rates before late 2024 at the earliest. This uncertainty has been key in continuing the remarkable strength of the U.S. dollar. Consequently, gold prices have been under intense pressure, illustrating the inverse relationship between the two assets.
U.S. President Donald Trump asserted on Wednesday that he would not consider reducing the 145% tariffs imposed on China. His comments have tempered expectations for a swift resolution to the ongoing U.S.-China trade war, further impacting market sentiment and gold prices. Investors are understandably spooked by these events, which could result in ongoing volatility in gold prices.
Market experts believe that the current downward spiral of gold prices might be able to pull them down toward strong technical support points. Analysts believe that following the trend, if sustained, gold may approach $3,265 to $3,260. From there on, it could retrace deeper back down towards the $3,223-$3,222 area. Moreover, there is worry that prices may return to revisit last week’s swing low near the $3,200 area.
High positive risk tone across the market is putting pressure on gold prices. This is just a day before President Trump’s press conference. U.S. investors are eagerly watching for any statements that may shape international diplomatic relations and domestic economic policies in the future.
On Thursday, the market’s focus will be on the U.S. Weekly Initial Jobless Claims data. Together, all this information is poised to seriously impact the game of USD price-setting. Market participants will be looking specifically at these numbers to get an idea of the health of the labor market. This might provide new bullish impetus for gold prices through the North American session.
It’s hard to overstate the kind of odds that gold prices are up against at the moment. The current war in Ukraine, along with rising geopolitical tensions elsewhere in the Middle East, may be increasing demand for this precious metal. This is because geopolitical uncertainties tend to drive investors towards gold, a safe haven asset. Admittedly, this trend can aid in offsetting some of the downward pressure weighing on gold prices today.
On the bullish side, from a technical perspective, it’s impressive to see new buying interest developing so close to the historic $3,260 resistance-turned-support level. This chain of evolution would be extremely bullish of gold if stronger upward momentum were to develop in reaction to key economic data or geopolitical surprises.