Gold prices maintained a negative bias for the second consecutive day on Wednesday, yet remained above the key $3,300 level as global equity markets rose on easing US-China trade tensions. US President Donald Trump’s decision to offer flexibility on tariffs to American carmakers further fueled optimism, contributing to a modest uptick in the US dollar. These factors undermined demand for the safe-haven asset.
However, Trump’s unpredictable trade policies have dampened investor confidence, leading to a pivot away from US assets in recent weeks. Concerns over the economic impact of tariffs, coupled with expectations for more aggressive policy easing by the Federal Reserve (Fed), may continue to weigh on the USD, which in turn supports gold prices and limits the downside risk for the precious metal.
Market Movers
On Tuesday, President Trump signed an order easing tariff effects on the US auto industry, granting carmakers two years to increase the share of domestic parts in US-assembled vehicles. This adds to growing optimism over trade negotiations and the possibility of US-China trade tensions de-escalating.
Despite a slight rise in the US dollar, concerns over Trump’s fluctuating trade policies and a potential economic slowdown have kept investors cautious. Moreover, market expectations that the Fed may resume its rate-cutting cycle soon should limit any substantial upside for the USD.
Dovish expectations for the Fed were further supported by weaker-than-expected US economic data. The Job Openings and Labor Turnover Survey (JOLTS) showed a decline in US job openings to 7.19 million in March, while the Consumer Confidence Index slumped to 86.0 in April, its lowest in nearly five years. These figures reinforce the case for further rate cuts, which could continue to support gold prices.
On the geopolitical front, Russia rejected Ukraine’s proposal to extend a unilateral ceasefire, and the US threatened to halt its efforts to mediate in the conflict unless both sides present concrete proposals, adding to uncertainty and supporting gold as a safe-haven asset.
US Data Ahead
Traders are now looking to Wednesday’s US economic reports, including the ADP private-sector employment data, Q1 GDP growth, and the Personal Consumption Expenditure (PCE) Price Index. These reports, along with Friday’s Nonfarm Payrolls data, will provide further insight into the Fed’s policy outlook and could influence gold prices in the near term.
Technical Outlook
Gold prices are holding key support at the $3,300 level, with technical indicators remaining in positive territory. A drop below the $3,300-3,290 support zone could see further declines toward $3,265-3,260, followed by the $3,225 level. A significant break below $3,225 may extend the pullback toward the $3,200 mark.
On the upside, gold faces resistance around the $3,328 level, followed by the $3,348-3,353 range. A breakthrough of this resistance could push prices toward $3,400 and beyond, with $3,425-3,427 as the next key hurdle before a potential move toward the psychological $3,500 mark.
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