Gold prices declined slightly during early European trading as profit-taking occurred. Market uncertainty regarding tariffs and recession concerns may still drive demand for Gold as a safe-haven asset.
The metal remained stable, holding its ground after slipping from a peak at $3,358. The Federal Reserve’s hawkish stance underlines a reduced prospect of a rate cut, potentially bolstering the US Dollar and affecting Gold prices.
Economic Indicators And Fed Signals
Federal Reserve Chair Jerome Powell indicated stagflation may be possible, complicating Fed goals. Economic data showed US Initial Jobless Claims fell to 215,000, while Continuing Claims increased slightly. Housing data revealed a rise in building permits, but a drop in housing starts.
Gold remains technically supported, trading above the 100-day Exponential Moving Average. The Relative Strength Index suggests overbought conditions, possibly indicating upcoming consolidation or a temporary decline.
Resistance is seen at $3,355, with a potential rally towards $3,400 if trading sustains above this. Support lies at $3,230, with a further drop to $3,105 possible.
Central banks increased Gold reserves by 1,136 tonnes in 2022, the highest yearly purchase ever recorded. Economic instability and currency depreciation may continue to influence the price of Gold.
Market Reactions And Geopolitical Concerns
Profit-taking early in the session led to a modest pullback in bullion, after a short-lived attempt to revisit recent highs. Despite the dip, we saw the metal hold above key levels, suggesting longer-term appetite remains intact. What triggered the immediate retreat seems tied more to short-term positions unwinding, rather than a shift in broader sentiment. Underneath, the unease triggered by tariff speculation and the looming risk of economic slowdown remains unresolved, and that alone may keep downside limited for now.
After hovering near a recent peak of $3,358, the decline was contained. The steady tone came in spite of hawkish signals from Powell. His messaging pointed to ongoing concerns about stubborn inflation coexisting with weakened growth – a scenario that makes policy responses more complicated. In this setting, it becomes harder to predict when, or even if, we’ll see rate reductions. That ambiguity has lifted the Dollar, which in turn tends to weigh on commodities priced in it.
The labour data didn’t offer a uniform picture. Initial jobless claims edged lower, a potential nod to resilience in employment. But that was met by a mild rise in continuing claims, suggesting some softness beneath the surface. Building permits came in stronger, which tells us future construction activity has some footing. However, housing starts dipped, exposing near-term challenges in that sector. Altogether, the economic picture is mixed, reinforcing the rationale for some to hold hard assets as a hedge.
Gold is still trading above its 100-day Exponential Moving Average, a level often watched by short-term momentum traders and institutions alike. That provides a layer of technical strength in the background. But the Relative Strength Index — which measures the velocity of recent gains — sits high. It doesn’t scream reversal yet, but it hints at stretched conditions. We could see a period where price moves sideways or pulls back modestly as buyers reassess and new catalysts emerge.
From a chart perspective, if prices remain above $3,355, momentum buyers could step in again, pushing towards $3,400. That level would likely attract more interest given its psychological weight. Conversely, if we lose $3,230, the next clear test becomes $3,105. Several option strikes are also clustered near those levels, which might magnify movement if those are breached.
Meanwhile, longer-term flows continue to shape the story. Central banks added over 1,100 tonnes of the metal last year — the largest accumulation ever documented. That’s not just about diversification; it speaks to persistent concerns about monetary stability and currency value deterioration. When fears rise over the credibility of paper currencies, the metal tends to benefit, almost reflexively.
We remain watchful over headlines tied to inflation readings and geopolitical tension, both of which can quickly reprice expectations. Until there’s clarity, price action will likely stay sensitive to any suggestion of instability or softening in broader economic metrics. Clipboard in hand, we’re keeping one eye on support levels and the other on policy signals — swings in expectations could arrive with little notice.
