Gold (XAU) price retreats as recession fears grow amid US trade policy concerns

As the week commenced, the gold price (XAU) retreated by 0.70%, slipping below the $2,900 mark, trading at $2,890 after having reached a high of $2,918 earlier in the day. This downturn in gold prices is reflective of increasing investor anxiety surrounding the potential for a recession in the United States, amplified by the controversial trade policies instituted by President Donald Trump. Market sentiment on Wall Street has been dismal, reeling from the ongoing economic slowdown. Trump, in a recent interview, characterized the current economic phase as a 'period of transition' which he believes would ultimately bring wealth back to America. Nonetheless, his remarks have done little to assuage the fears prevalent among traders, who are adjusting their positions in anticipation of mounting economic challenges. Recent forecasts from the Atlanta Fed GDP Now model predicting a -2.4% growth for the first quarter of 2025 serve to strengthen these concerns, indicating that the U.S. economy may experience its first negative print since the onset of the COVID-19 pandemic. In tandem with this, the Greenback has demonstrated some recovery against previous losses, with the US Dollar Index (DXY) inching up by 0.09% to 103.99. However, broader economic concerns, especially following China's inflation report in February which came in at -0.7% YoY—well below economists’ predictions—have raised alarms regarding the global economic landscape. For traders, the imminent release of inflation data in the U.S. is a critical focus this week, as a robust inflation report could impact the Federal Reserve's approach to interest rate cuts, further influencing market dynamics. Technical analysis hints at a bearish momentum for gold, particularly if it closes below $2,900, potentially leading prices to test the $2,850 level, and following that, $2,832 and $2,800. A resurgence above $2,900 could, on the other hand, bring resistance levels of $2,950 and the record high of $2,954 into play. This article has been analyzed and reviewed by artificial intelligence, ensuring a comprehensive examination of the underlying economic indicators and market sentiment surrounding gold prices. Market participants are urged to stay informed as they navigate these turbulent waters, particularly as economic data releases may further reshape investor outlooks and strategies. Overall, the sentiment in the markets suggests a need for caution and thorough research before making investment decisions, given the inherent risks highlighted by external economic factors.