Gold prices slipped today, trading near $3,230 per troy ounce, as the US dollar rebounded and Treasury yields climbed, exerting downward pressure on the precious metal. Despite the decline, gold managed to hold above its 21-day Simple Moving Average (SMA) support at $3,234, signaling resilience in the market.
Market Analysis: Dollar Strength and Yield Impact
The US dollar’s modest recovery has made gold more expensive for foreign buyers, contributing to the price drop. Additionally, rising yields across different maturities have further pressured gold prices, as higher yields increase the opportunity cost of holding non-yielding assets like gold.
The US 10-year Treasury yield surged to 4.331%, while real yields, measured by Treasury Inflation-Protected Securities (TIPS), rose to 1.980%. These factors have weighed on gold’s bullish momentum, limiting its ability to sustain recent gains.
Trade and Economic Factors: US-China Relations and Fed Policy
Hopes of easing trade tensions between the US and China have supported positive market sentiment, potentially reducing gold’s safe-haven appeal. The US government’s decision to limit tariffs to specific trade partners has alleviated some global trade fears, further dampening demand for gold as a hedge against uncertainty.
Investors are also closely watching the upcoming US Nonfarm Payrolls report, which may provide insights into the Federal Reserve’s policy direction. The Atlanta Fed President Raphael Bostic recently stated that he supports only one rate cut in 2025, pushing the inflation target out to 2027. This stance has reinforced expectations that interest rates may remain elevated, which could continue to pressure gold prices.
Technical Outlook: Key Resistance and Support Levels
Gold’s immediate resistance level is $3,260, with a potential target at $3,350 if the price recovers further. The 21-day SMA at $3,234 remains a crucial support level, and a break below this threshold could trigger further declines.
Market analysts suggest that if gold falls below $3,200, it may test the psychological support level at $3,000, where buyers could step in to stabilize prices.
Investor Focus: Fed Rate Cuts and Inflation Trends
Investors are closely monitoring US jobs data and Federal Reserve policy cues, which could significantly impact gold prices. Traders are betting on potential rate reductions by the Fed, but uncertainty remains high as inflationary pressures persist.
The S&P Global Manufacturing PMI showed a sharp deterioration in US factory activity, falling from 52.7 to 49.8, signaling contraction. However, the S&P Global Services PMI surged from 51.0 to 54.3, exceeding forecasts and highlighting strong service sector momentum. These mixed economic signals add to the uncertainty surrounding Fed policy decisions.
Conclusion: Gold’s Outlook in a Volatile Market
Gold prices remain under pressure due to rising yields, a stronger dollar, and improving market sentiment. While safe-haven demand has weakened, ongoing geopolitical risks and inflation concerns could provide support for gold in the long term.
With traders awaiting key economic data, including the Fed’s preferred inflation gauge and the Nonfarm Payrolls report, gold’s trajectory remains uncertain. Investors will be watching closely to see whether gold can hold above key support levels or if further declines are ahead.
