Gold price trims gains, slips below $3,300 amid US economic concerns

In an intriguing day for the financial markets, the gold price (XAU/USD) has retracted from its record highs, falling back below the $3,300 threshold. This decline follows a notable climb earlier during the European session, where gold reached new all-time highs but was prompted by profit-taking from bulls capitalizing on the slightly overbought conditions observed in the short-term market charts. This pullback coincides with anticipation surrounding comments from the Federal Reserve (Federal Reserve Chair Jerome Powell), which are expected to offer insights into future monetary policy actions, particularly regarding potential rate cuts. The backdrop of persistent trade-related uncertainties, particularly concerning the US-China trade war, seems to create a favorable environment for gold as a safe-haven asset during economic tumult. In fact, market sentiment appears to align towards expectations of a significant policy easing from the Fed, as traders speculate on a potential 100 basis points rate cut being priced in for 2025. This concern is further complemented by mounting apprehensions regarding a tariffs-induced economic slowdown in the United States, which has resulted in a weakening US dollar, nearing its lowest point since April 2022. From a technical standpoint, the Relative Strength Index (RSI) indicates slightly overbought conditions, warning bullish traders to exercise caution. Analysts suggest that it may be prudent for traders to wait for consolidation or a minor pullback to better position themselves for potential upwards movement in gold prices. If any pullbacks occur, support levels have been identified around the $3,246-3,245 region, and another support area could materialize around the $3,200 mark, should further declines occur. As the market anticipates Powell’s speech, which could shift dynamics in the immediate future, gold remains a focal point for traders navigating this volatile market. Overall, the commentary reflects an environment of caution mixed with opportunity, as many traders remain on alert for larger economic signals that could influence market direction in the days following Powell’s address. Moreover, with inflation pressures and tight monetary policy looming on the horizon, it’s clear that gold will continue to hold its ground as a critical asset amidst widespread uncertainty in the financial landscape.