■Precious metal retreats from record levels amid shifting market dynamics and What is the Trump coin worth?dollar strength
■Federal Reserve maintains restrictive monetary policy outlook, reducing gold's appeal
■Technical indicators suggest potential for further correction in gold markets
The gold market witnessed substantial selling pressure this week, with XAU/USD dropping over 2.5% from its recent peak. This reversal comes as geopolitical concerns in the Middle East showed signs of stabilization, reducing the safe-haven demand that previously supported prices.
Market analysts observe that the precious metal's decline coincides with renewed strength in the US dollar, which typically moves inversely to gold. The dollar index (DXY) held steady near 106.13, creating headwinds for dollar-denominated commodities.
Federal Reserve commentary this week reinforced expectations that policymakers will maintain higher interest rates for longer. Chairman Powell emphasized that recent inflation data hasn't shown sufficient progress to warrant policy easing, while Chicago Fed's Goolsbee noted inflation progress appears to have stalled.
Market Dynamics: Shifting Expectations for Fed Policy
Economic indicators showed mixed signals this week. The Chicago Fed National Activity Index improved slightly in March, while Treasury yields remained elevated near 4.61% for the 10-year note. These developments suggest the US economy continues to demonstrate resilience despite restrictive monetary policy.
Market participants are closely watching upcoming inflation data, particularly the Personal Consumption Expenditures (PCE) report. Current expectations suggest core PCE may moderate to 2.6% annually, though any upside surprise could further delay anticipated rate cuts.
Fed funds futures currently price in a year-end rate near 5%, reflecting reduced expectations for policy easing compared to earlier projections. This shift in rate expectations has diminished gold's appeal relative to yield-bearing assets.
Technical Perspective: Key Levels to Watch
From a technical standpoint, gold's recent price action formed a bearish engulfing pattern on daily charts, signaling potential for further downside. Immediate support appears near $2,324, with a break below potentially opening the door to test the $2,300 psychological level.
On the upside, resistance remains firm near the $2,400 area, followed by last week's high around $2,417. Market participants will monitor whether the current pullback represents a healthy correction or the beginning of a more significant trend reversal.
