Gold (XAU/USD) faces difficulty in extending its modest intraday gains, managing to stay above the $3,000 mark during the first half of the European session on Tuesday. Despite this, global risk sentiment remains positive, buoyed by expectations of less disruptive US trade tariffs, optimism over a potential Russia-Ukraine peace deal, and China’s stimulus efforts. Additionally, the US Dollar (USD) has held its ground near a three-week high achieved on Monday, which has acted as a headwind for the precious metal.
While the USD remains resilient, there is growing speculation that the Federal Reserve (Fed) could soon resume its rate-cutting cycle. This expectation has kept USD bulls from placing aggressive bets, providing some support for gold, which yields no interest. Moreover, the absence of strong follow-through selling below the key $3,000 level warrants caution, making it too early to confirm that XAU/USD has reached its near-term peak.
Global Risk Sentiment and Positive Developments
The global market mood has been largely driven by hopes that the United States’ trade tariffs, set to take effect on April 2, will be narrower and less stringent than initially feared. In a positive development, Russian state media, RIA, reported that a joint statement between the US and Russia is expected on Tuesday after day-long talks in Saudi Arabia focused on a potential Black Sea maritime ceasefire deal.
Adding to the positive tone, China’s consideration of including services in a subsidy program to stimulate consumption has further boosted investor confidence, leading to a weaker demand for gold as a safe-haven asset.
US Economic Data Supports Dollar
The US Dollar continues to trade near a three-week high, bolstered by a stronger-than-expected Composite PMI report for March, which rose to 53.5 from 51.6 in the previous month. The Federal Reserve’s recent decision to lower its 2025 growth forecast and raise its inflation outlook, amid uncertainty over trade tariffs, has fueled speculation that the Fed may cut rates in 2025. However, concerns about US economic growth have led to expectations that the Fed could begin its rate-cutting cycle sooner than anticipated, which has limited further USD gains and provided some support for gold.
Atlanta Fed President Raphael Bostic’s remarks on Monday indicated that inflation is likely to progress more slowly in the coming months, with the Fed expected to reduce the benchmark rate by just 25 basis points in 2025.
Focus on US Economic Releases and Future Fed Guidance
Traders are now awaiting Tuesday’s US economic data, including the Conference Board’s Consumer Confidence Index, New Home Sales, and the Richmond Manufacturing Index, for short-term trading opportunities. Additionally, speeches from influential Federal Open Market Committee (FOMC) members later in the day could drive USD demand, potentially impacting XAU/USD movements.
The market’s attention will also turn to Friday’s release of the US Personal Consumption Expenditure (PCE) Price Index, a key indicator that could offer fresh insights into the Fed’s future rate-cutting path.
Technical Outlook: Gold’s Resilience at $3,000
From a technical standpoint, the XAU/USD pair has shown resilience near the $3,000 psychological level. If gold breaks decisively below this level, it could trigger technical selling, potentially pushing prices toward the $2,982-2,978 region. A further corrective move could extend towards the $2,956-2,954 support area.
On the upside, the $3,033 level, or the recent swing high, poses an immediate resistance before the all-time peak of $3,057-3,058 reached last week. With daily chart oscillators remaining in positive territory, any follow-through buying could signal a continuation of the uptrend, potentially setting the stage for further gains in the coming months.
In conclusion, while gold price action has shown some resilience above the critical $3,000 level, the market remains cautiously optimistic amid positive global developments and expectations of future US economic data.